Question

An organization is considering purchasing a commercial property. Because of the location of the property and the known recent history of activities on the property, management has asked the internal audit activity, in cooperation with legal counsel, to provide a preliminary identification of any environmental liability. The strongest reason supporting management's decision to request such an investigation is

A. Regulatory agencies require a purchaser to identify and disclose all actual and potential instances of contamination.
B. The potential for future liability may outweigh any advantages achieved by obtaining the property.
C. The current owner would be required by law to clean up all identified contamination before the sale is closed.
D. Management will be able to pay a lower price for the property if environmental contamination can be identified.

Answer 1

Regulatory agencies require a purchaser to identify and disclose all actual and potential instances of contamination. Option A

Step-by-step explanation:

The strongest reason supporting management's decision to request a preliminary identification of any environmental liability is A. Regulatory agencies require a purchaser to identify and disclose all actual and potential instances of contamination.

This means that by conducting an investigation, the organization can ensure compliance with regulations and avoid legal consequences. It is important to identify any environmental liability before purchasing the property to assess the potential risks and liabilities involved, and to make an informed decision. Option A