Walmart's form 10-K to determine what contingencies they may or
may not have included. I came across the contingencies section of the
form 10-K where Walmart explains how they handle contingencies
and when they include the liability in the financial statements and the
contingency in the footnotes. "We are involved in a number of legal
proceedings. We record a liability when it is probable that a loss has
been incurred and the amount is reasonably estimable. We also
perform an assessment of the materiality of loss contingencies where
a loss is either not probable or it is reasonably possible that a loss
could be incurred in excess of amounts accrued. If a loss or an
additional loss has at least a reasonable possibility of occurring and
the impact on the financial statements would be material, we provide
disclosure of the loss contingency in the footnotes to our financial
statements." (United States Securities and Exchange Commission,
2020) A subsidiary of Walmart, Asda Stores Ltd., is a defendant in
more than 35,000 claims in the United Kingdom due to previous
employees claiming that wages were paid unfairly between men and
women in the retail stores and warehouses. The proceedings have
not been completed as of the 10-K issue date the result could not be
reasonably estimated of possible losses. Because Walmart's process
is to only report the contingency in the financial statements when the
loss can be reasonably estimated, this issue has not been included in
the statement.
The procedures that an auditor should use to search for
contingencies is to review tax returns, meeting minutes, and
documentation from law firms. If there are contingencies, then they
will likely be discussed in meetings, or be cause for an impact or audit
on the tax returns. When there are contingencies present, law firm
documentation is sure to provide proof. These procedures will serve
as evidence and by reviewing each of these items, the auditor will be
able to uncover any contingencies that were not reported.
References
United States Securities and Exchange Commission. (2020). Form 10-
K. Sec.gov.
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000104169/0
00010416920000011/wmtform10-kx1312020.htm
