Multiple Choice
If the auditor concludes that there are contingent liabilities, he or she must evaluate the significance of the potential liability and the nature of the disclosure needed in the financial statements. Which of the following statements is not true?
A) The potential liability is sufficiently well known in some instances to be included in the financial statements as an actual liability.
B) Disclosure may be unnecessary if the contingency is highly remote or immaterial.
C) Frequently, the CPA firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or management's attorneys.
D) Answers B and C are correct, but answer A is not.
Correct Answer:
Verified
Correct Answer:
Verified
Q16: If, during the completion phase of the
Q28: An independent review must be performed of
Q35: Current professional auditing standards require the performance
Q64: Which of the following is not a
Q70: When testing for contingent liabilities, the primary
Q71: The auditor's primary concerns relative to presentation
Q77: When preparing a standard inquiry of client's
Q83: Which of the following audit procedures would
Q96: Which of the following would the auditor
Q114: What are the three required conditions for