Abstract This study provides empirical evidence on auditor evaluations of contingent claims. First, a correspondence between the uncertainty language of Financial Accounting Standards Board Statement 5 (remote, reasonably possible, and probable) and probability ranges is established. Second, auditors' disclosure recommendations for four cases are examined in light of their individual probability ran,pes. The results indicate considerable disagreement across auditors in interpreting the uncertainty language in Statement 5. This lack of agreement may result in auditors recommending different disclosures under identical circumstances.
Jiambalvo et al. (Sun,) studied this question.