When Auditing Contingent Liabilities, the Primary Objective at the Initial

question 37

Multiple Choice

When auditing contingent liabilities, the primary objective at the initial stage of the tests is to determine:

• A) the likelihood of the liability.
• B) the materiality of any liability.
• C) the existence of the liability.
• D) what constitutes adequate disclosure of the liability.

---

Definitions:

Agent

An individual or entity authorized to act on behalf of another person or entity in legal or business matters.

Defraud

The act of misleading or deceiving someone typically for financial or personal gain.

Scope of Authority

The extent of powers given to an individual or a body, determined by an agreement, law, or rules governing their actions.

Agent

A person or entity authorized to act on behalf of another, often in a business or legal setting, to undertake specific actions or transactions.