John knows that communication with law firms is an important step according to CAS. Accordingly, he designed the following audit program for contingencies:

1. Obtain a listing of all lawyers who performed legal services for the client in the year.

2. Compare the list to the amounts in the legal fees account in the general ledger.

3. Select 70% of the entries that represent material amounts, as a judgmental sample.

4. Send a letter to each law firm in the sample to enquire about contingencies. John plans to handle all communications with the law firms to ensure he has control over the procedure.

5. Review the replies from each law firm.

Required:

a. Assuming the above is a complete listing of Johns audit program, identify the problems in steps 3 and 4.

b. Design an audit program of four audit procedures for auditing contingencies. Do not include any of steps 1 through 5 above.