Which is a TRUE statement about unrecorded liability schemes? Group of answer choices External auditors can usually detect unrecorded liability through testing of recorded accounts payable and general ledger transactions. Failure to record liabilities on a timely basis is a form of financial statement misrepresentation. External auditors should use similar procedures and audit thresholds year after year so that they consistently detect the same types of errors. There is no issue if a public company's quarterly liabilities are understated due to unrecorded liabilities, as long as the balances are corrected before the completion of the year end audit.