If the Auditor Concludes That There Are Contingent Liabilities, He

question 38

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) Frequently, the audit firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or the client's legal counsel.
• C) Disclosure may be unnecessary if the contingency is highly remote or immaterial.
• D) The auditor should primarily rely on management's judgement about potential liabilities.

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Definitions:

Respiratory Droplets

Tiny droplets produced when an individual coughs, sneezes, talks, or breathes, which can carry pathogens like viruses and bacteria, potentially causing infections.

Needlestick Injuries

Injuries caused by needles or sharp medical instruments, often a concern for healthcare workers due to the risk of transmitting infections.

OSHA

Occupational Safety and Health Administration, a U.S. government agency responsible for enforcing workplace safety and health regulations.

Staph Bacterium

A type of bacteria commonly found on the skin or in the nose of people, which can occasionally cause infections, ranging from minor to life-threatening.