The audit of the financial reports of Matilda Ltd had been completed except for the outcome of a material contingent liability that is still subject to the outcome of a court decision.The case is still ongoing and but it is expected that a decision will be made after three months.The deadline for submitting the financial reports is next month.Which action is consistent with the notion of "timeliness" in the preparation of financial reports?
A)Matilda Ltd should wait for the court decision to be completed before releasing the financial reports as the amount of the liability is material.
B)Matilda Ltd should release the financial report on or before the deadline but exclude the contingent liability from the report as the outcome is still uncertain.
C)Matilda Ltd should release the financial report on or before the deadline but disclose the contingent liability in the notes to the accounts.
D)Matilda Ltd must wait for the court decision to be completed before releasing the financial reports as it is expected to occur in the near future anyway (i.e.three months).
E)None of the given answers.

Question

Quizplus · Accepted Answer

The most appropriate action that is consistent with the notion of "timeliness" in the preparation of financial reports is option 3: Matilda Ltd should release the financial report on or before the deadline but disclose the contingent liability in the notes to the accounts.

The Audit of the Financial Reports of Matilda Ltd Had