A number of companies have pending lawsuits or other contingent liabilities reported in their financial statements. Required:

Question:

A number of companies have pending lawsuits or other contingent liabilities reported in their financial statements.

Required:

a. Search the EDGAR database found atwww.sec.gov/edgar/searchedgar/companysearch.html to find a company’s 10- K that reports a contingent liability. Write a paragraph summarizing one of the liabilities found in the financial statements. Did the company disclose the liability in the footnotes only, or did it recognize the liability in the financial statements?

b. What procedures might the auditors use to search for the contingent liabilities listed in part (a)?

Contingent liabilities
A contingent liability is an obligation of business related to an uncertain future event. The business must record it in its financial statements if the amount can be reliably estimated and it is probable that amount will be paid by business as a...