If the auditor concludes that there are contingent liabilities, he or she must evaluate the significance of the potential liability and the nature of the disclosure needed in the financial statements. Which of the following statements is not true?
A) The potential liability is sufficiently well known in some instances to be included in the financial statements as an actual liability.
B) Disclosure may be unnecessary if the contingency is highly remote or immaterial.
C) Frequently, the CPA firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or management's attorneys.
D) Answers B and C are correct, but answer A is not.

Question

Quizplus · Accepted Answer

Disclosure may be unnecessary if the contingency is highly remote or immaterial.

If the Auditor Concludes That There Are Contingent Liabilities, He