Choice "B" is correct. An external inquiry of the entity's attorney is the auditor's primary means of obtaining verification of management information pertaining to litigation, claims, and assessments.
Choice "c" is incorrect. The attorney is an expert in litigation, claims, and assessment, and can provide information about the nature of the matter, progress of the case, degree of probability of an unfavorable outcome, and estimate of potential loss. However, the attorney is not an expert in accounting and would not provide assurance regarding the accounting for such matters.
Choice "d" is incorrect. Although the attorney does provide a description of litigation, claims, and assessments that have a reasonable possibility of unfavorable outcomes, this is only a portion of what the attorney provides, and is not the primary reason for the request. The primary reason for the request is to obtain verification of management information pertaining to litigation, claims, and assessments.
Choice "a" is incorrect. The attorney does provide information regarding the degree of probability of an unfavorable outcome, but evaluating whether loss contingencies are possible, probable, or remote is not the primary reason for the request. The primary reason for the request is to obtain verification of management information pertaining to litigation, claims, and assessments.