We are working for a large publicly-traded company that has experienced significant operating losses for the past few years, which has caused a sharp decline in the company’s stock price.
The CFO of the company has asked us to prepare a memo (single-spaced) discussing the following topics:
Currently, the company records all contingent liabilities regardless of the facts and circumstances of each situation. We must explain whether this is appropriate, how should contingent liabilities be recorded if not all, and how can the company manipulate contingent liabilities to its advantage?
Explain at least 3 items that we feel would be beneficial to a new Controller coming into his/her position as it relates to creating and growing stockholder value from an accounting standpoint.

Answer rating: 100% (QA)

It is not an appropriate policy tp record all contingent liabilities in the financial statements Contingent liabilities are obligations which have not yet occurred but a possibility exists of their oc... View the full answer