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An Audit Client Loses a Lawsuit and the Judgment Is

question 49

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An audit client loses a lawsuit and the judgment is for an amount in excess of the contingent liability the client had recorded in the audited financial statements. The auditor, using the typical degree of due care as other members of the profession, determined that the amount of contingent liability recorded by the client in the financial statements for the pending lawsuit was reasonable, given the facts at the time of the audit. This judgment by the auditor is likely to result in:


Definitions:

Antiseptic

A substance that inhibits the growth of microorganisms on living tissue or surfaces, often used to prevent infection in wounds.

Anesthesia

The administration of drugs or other agents to eliminate sensation, typically to allow medical procedures or surgery without pain.

Antipyretic

A type of medication used to reduce or prevent fever.

Pyrogenic

Capable of producing fever or raising the body temperature.

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