Contingent liabilities not reflected on a local agency's balance sheet will consist mainly of pending or threatened claims, lawsuits or judgments for which no provision has been made inasmuch as some uncertainty exists at the balance sheet date as to whether there will ever be any legal obligation. Contingent liabilities involving amounts which are or may become material shall be listed in a schedule of contingent liabilities, to be submitted with each quarterly financial report, together with the estimated amounts involved and such information as will explain their nature and status.