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) Disclosure may be unnecessary if the contingency is highly remote or immaterial.
B) The potential liability is sufficiently well- known in some instances to be included in the financial statements as an actual liability.
C) The auditor should primarily rely on management's judgement about potential liabilities.
D) Frequently, the audit firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or the client's legal counsel.

Question

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The Answer of 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) Disclosure may be unnecessary if the contingency is highly remote or immaterial.
B) The potential liability is sufficiently well- known in some instances to be included in the financial statements as an actual liability.
C) The auditor should primarily rely on management's judgement about potential liabilities.
D) Frequently, the audit firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or the client's legal counsel.

If the Auditor Concludes That There Are Contingent Liabilities, He