When dealing with contingencies:
A)all material contingencies must be disclosed or footnoted.
B)the auditor must exercise considerable professional judgment when evaluating whether the client has applied the appropriate treatment.
C)it is easy for the auditor to uncover contingencies without management's cooperation.
D)the review for contingent liabilities is only performed at the beginning and the end of the audit.

Question

Quizplus · Accepted Answer

The auditor must exercise considerable professional judgment when evaluating whether the client has applied the appropriate treatment for contingencies. The disclosure of material contingencies must also be assessed and reported in the financial statements. It is not easy for the auditor to uncover contingencies without management's cooperation, and contingency review should be performed throughout the audit, not just at the beginning and end.

When Dealing with Contingencies