When auditing contingent liabilities,the primary objective at the initial stage of the tests is to determine
A)the materiality of any liability.
B)what constitutes adequate disclosure of the liability.
C)the likelihood of the liability.
D)the existence of the liability.

Question

Quizplus · Accepted Answer

The primary objective at the initial stage of auditing contingent liabilities is to determine whether there is evidence of the existence of the liability. Only after it is established that the liability exists can further procedures be carried out to determine its likelihood and materiality. Adequate disclosure of the liability is not the primary focus at the initial stage of testing.

When Auditing Contingent Liabilities,the Primary Objective at the Initial Stage