As an auditor, we would examine the nature of the legal expense even if it is not materil/ significant from the audit engagement point of view.
The rationale is to examine the nature of the expense incurred and to search for any outstanding litigation against the company, or the company is involving in any legal cases. As the damages for litigation could be tremendous, and needed to be disclosed to the financial statement users.
Hence, careful examination is required.
Alternatively, ' Legal Confirmation' could be sent to the client's lawyers to confirm if there is any on-going legal cases against the company.
