Contingent liabilities are those future expenses that might occur. Common examples include lawsuits, warranties on company products and unsettled taxes. Because of the risks they impose and the increased frequency with which they occur in contemporary finance, contingent liabilities should be carefully considered by every private and government auditor. Credit rating agencies, creditors and investors rely on audits to expose hidden risks to counterparties. The opposite risk is also present. A company might overstate its contingent liabilities and scare away investors, pay too much interest on its credit or fail to expand sufficiently for fear of loss. Solution Contingent liabilities are those future expenses that might occur. Common examples include lawsuits, warranties on company products and unsettled taxes. Because of the risks they impose and the increased frequency with which they occur in contemporary finance, contingent liabilities should be carefully considered by every private and government auditor. Credit rating agencies, creditors and investors rely on audits to expose hidden risks to counterparties. The opposite risk is also present. A company might overstate its contingent liabilities and scare away investors, pay too much interest on its credit or fail to expand sufficiently for fear of loss..

1. Contingent liabilities are those future expenses that might occur. Common examples include
lawsuits, warranties on company products and unsettled taxes. Because of the risks they impose
and the increased frequency with which they occur in contemporary finance, contingent
liabilities should be carefully considered by every private and government auditor. Credit rating
agencies, creditors and investors rely on audits to expose hidden risks to counterparties. The
opposite risk is also present. A company might overstate its contingent liabilities and scare away
investors, pay too much interest on its credit or fail to expand sufficiently for fear of loss.
Solution
Contingent liabilities are those future expenses that might occur. Common examples include
lawsuits, warranties on company products and unsettled taxes. Because of the risks they impose
and the increased frequency with which they occur in contemporary finance, contingent
liabilities should be carefully considered by every private and government auditor. Credit rating
agencies, creditors and investors rely on audits to expose hidden risks to counterparties. The
opposite risk is also present. A company might overstate its contingent liabilities and scare away
investors, pay too much interest on its credit or fail to expand sufficiently for fear of loss.