A lawsuit has been filed but not yet resolved against an audit client. This lawsuit does not meet the conditions required for a contingent liability.

Question

Quizplus · Accepted Answer

According to accounting standards, a lawsuit filed against an audit client that has not yet been resolved should be evaluated for potential loss and disclosure as a contingent liability. Therefore, this situation meets the conditions required for a contingent liability.

A Lawsuit Has Been Filed but Not Yet Resolved Against