Question

For non-disclosure of contingent liabilities in the financial statements, an auditor should give ______________.

• A. a clear opinion
• B. a qualified opinion
• C. an adverse opinion
• D. a disclaimer opinion

Answer 1

The correct option is B a qualified opinion

A contingent liability is the possibility of a liability arising from a future event. The liability is contingent on whether or not the event occurs.

Auditors usually ask management to write a statement acknowledging they disclosed all known contingent liabilities.

However, if contingent liabilities are not disclosed in the financial statements, auditor will give the qualified opinion.