Auditing - What are Contingencies

The video tutorial explains contingencies, which are uncertain events that can affect a company's financial status. Auditors must ensure these are properly disclosed in financial statements. Contingent liabilities may require inclusion on the balance sheet or just a note, based on their likelihood and estimated value. Auditors identify contingencies by consulting management, reviewing documents, and sending attorney letters. Examples include service liabilities, product warranties, and lawsuits.

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