Disagreement with Auditors

Disagreement with Auditors. Officers of Richnow Company do not wish to disclose information about a product liability lawsuit filed by a customer seeking $500,000 in damages. They believe the suit is frivolous and without merit. Outside counsel is more cautious. The auditors insist on disclosure. Angered, Richnow’s chair of the board threatens to sue AOW if a standard (unmodified) report is not issued within three days.

Required:

Draft AOW’s report appropriate under the circumstances.

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