When the proper disclosure in the financial statements of material contingencies is through footnotes, the footnote should describe the nature of the contingency to the extent it is known and the:
A) auditor's opinion as to the expected outcome.
B) steps the client has taken to ensure that it doesn't recur.
C) opinion of legal advisers or management as to the expected outcome.
D) opinion of an outside independent party, such as an appraiser, as to the expected outcome.

Question

Quizplus · Accepted Answer

The footnote should describe the nature of the contingency and the opinion of legal advisers or management as to the expected outcome. The auditor does not provide an opinion on the expected outcome, and the steps taken by the client or opinion of an outside independent party are not relevant to the disclosure of the contingency itself.

When the Proper Disclosure in the Financial Statements of Material