Kathy Choi, a public accountant, has completed the audit of notes payable and other liabilities for Valley River Electrical Services Ltd. and now plans to audit contingent liabilities and commitments.
REQUIRED
a. Distinguish between contingent liabilities and commitments, and explain why both are important in an audit.
b. Describe how Kathy's testing in Phases 1 to 6 of the audit of notes payable might help her obtain evidence about the presentation and disclosure audit objectives.
c. Identify three useful audit procedures for uncovering contingent liabilities that Kathy would likely perform in the normal conduct of the audit, even if she had no responsibility for uncovering contingencies.
d. Identify three other procedures Kathy would likely perform specifically for the purpose of identifying undisclosed contingencies.