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This post addresses the nature and events of a contingency.

You are auditing Green Corporation for the calendar year 2010. Among other items related to the audit; Green Corporation was being sued for personal injury resulting from the malfunction of one of their products. The lawsuit was initiated by Sue Ewe in September, 2010. Management and the company's outside legal counsel estimated the loss from the suit to be approximately $250,000. This amount is accrued and properly disclosed in the footnotes of the financial statements. You have no reason to believe that the estimate is inaccurate. You completed your audit and dated your report March2, 2011. On March 20, 2011, you read in a national business periodical that the jury in trial awarded Sue Ewe $1.5 million

Required:
Discuss the nature of these events and what responsibility, if any, you have regarding the news of March 20, 2011

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Discuss the nature of these events and what responsibility, if any, you have regarding the news of March20, 2011.

The auditors do not have a responsibility in this situation for a few reasons. The amount that was accrued as of the balance sheet date was ...

Solution Summary

The solution provides a detailed discussion explaining the nature and events and what responsibility, if any, there is regarding the news of the personal injury lawsuit against Green Company.

$2.19