Question

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify, evaluate, and account for contingencies?

a. Management.

b. The auditor.

c. The audit committee.

d. The client's attorney.

Answer 1

It is the responsibility of management to create and uphold policies and procedures that allow for the proper identification, assessment, and recording of potential contingencies that may impact the organization.

Step-by-step explanation:

The responsibility for designing and maintaining policies and procedures to identify, evaluate, and account for contingencies lies with management.

Management is responsible for creating and implementing internal controls within an organization to address potential risks and uncertainties. This includes developing policies and procedures to identify and assess contingencies, such as potential lawsuits, environmental liabilities, or other uncertain events.

Management's role in contingency planning is essential for effective risk management and financial reporting.