3. City has been named in a tort liability lawsuit where one of the workers was killed while operating a backhoe. Family of employee has indicated that the backhoe had not been maintained properly which they believe is gross negligence. City's attorney has filed a counter-complaint indicating that the employee was negligent in operating the backhoe The family is seeking $500,000. The audit standard for the proper disclosure or recording would be: A. Nothing, because the City does not believe they are responsible and the employee is. B. Put the potential lawsuit in the notes to the financial statements because it gives the reader a full understanding of a contingent liability which is the lawsuit C. Record the contingent liability for $500,000 and include it in the government-wide statements. D. Nothing, because most governmental entities have immunity from lawsuits