Practice Quiz

Forensic Accounting

Category - Fundamental Forensic Knowledge

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How is information about contingent liabilities related to a litigation engagement gathered?
  1. By asking the client
  2. By inquiring about documents related to any current litigation case
  3. Any means that are deemed applicable by the accounting standards
  4. All of the above
Explanation
Answer: D - Contingent litigation liabilities may not be apparent, but a practitioner needs to be sure about these. One way of doing so is to inquire the client about documents related to such litigations, which may affect the entity in the time to come. Documents related to current and pending litigation cases should be sought. In addition, any other option that is deemed applicable by the relevant accounting standards should be looked into to cater to contingent liabilities.
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