A contingency liability as a prospective responsibility that occurs since the
outcome of future event is unclear. For this week’s discussion I chose to
research Walmart. This is a company that has several pending litigations and
other contingent liabilities. It is seen from their 10K report that the company
has made the necessarily accruals to the consolidated financial statement.
Accruals however haven't been made for the liability is not probable or cannot
be estimated (Walmart, 2019).
One of the contingencies reported was the ASDA Equal Values Claims. There is
currently a 30,000 equal value claim before an employment tribunal in
Manchester. It is claimed that the work performed by the female employees at
Asda retail stores, a subsidiary of Walmart, is equal to the work being
performed by men in the same position in the distribution warehouses
(Walmart, 2019). Since Walmart is unable to predict the number of claimants or
money this will cost, they didn't provide the specific contingencies.
To search this contingency, some procedures that can be used include the
following:
• Examinations of documents for pending lawsuits:
o Ex: invoices or court records.
• Discussions with management regarding policies and procedures within the
company to identify, evaluate and account for contingent liabilities.
• Legal letter that describes and evaluates litigations, claims or assessments.
• Written representation from management that litigation, claims and assessments
have been disclosed.
References:
Walmart. January 31, 2019. 10-K Annual Report. Retrieved from:
https://www.sec.gov/archives/edgar/data/0000104169/000010416919000016/
wmtform10-kx1312019.htm
