The company I have chosen to look into for contingent liabilities is Amazon. The last 10-
K reported for the company year ends December 31, 2021. When researching Amazon, the
contingent liabilities of the company are U.S. income taxes and foreign income taxes.
Foreign income taxes are subject to U.S. taxation. The contingent liability is shown in the
footnotes as well as the financial statements (Inline XBRL Viewer). Some procedures
auditors may use to search for contingent liabilities are probability of occurrence, and
journal entries for probable events. For probability of occurrence, it can be recognized in
three levels which are remote, reasonably possible and probably, only the possible and
probable contingencies will be disclosed in the footnotes (Audit Procedures for a
Contingent Liability). Since the income taxes are described in the footnotes, we can see
that probability of occurrence was used. For journal entries for probable events, you would
need to record probable contingencies on financial statements therefore income taxes are a
probable contingency because it is recorded (Audit Procedures for a Contingent Liability).
This means you could also use this procedure to realize this contingency.
References
Audit Procedures for a Contingent Liability. (n.d.). Your Business.
https://yourbusiness.azcentral.com/audit-procedures-contingent-liability-29381.html
Inline XBRL Viewer. (n.d.). Www.sec.gov.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872422000005/amzn-
20211231.htm
