If purchase adjustments are estimated at quarter end, _______.
A)management should establish controls to ensure adjustments are made based on analysts' information and that adjustments are consistent from quarter to quarter
B)the auditor should establish controls to ensure adjustments are made based on reliable information and that adjustments are consistent from quarter to quarter
C)management should establish controls to ensure adjustments are made based on reliable information and that adjustments are consistent from quarter to quarter
D)management should establish controls to ensure adjustments are made based on regulatory information and that adjustments are consistent from quarter to quarter

Question

Quizplus · Accepted Answer

Management is responsible for ensuring that purchase adjustments are made based on reliable information and that adjustments are consistent from quarter to quarter. It is important for management to establish controls to ensure that the estimated adjustments are based on accurate and reliable information. Consistency from quarter to quarter is also important to ensure the reliability and comparability of financial statements. The auditor should review management's controls and the reliability of the information used to estimate purchase adjustments. However, the responsibility for ensuring the accuracy and consistency of these adjustments rests with management. Assertions based on analysts' or regulatory information may be relevant, but reliability and consistency are the primary concerns.

If Purchase Adjustments Are Estimated at Quarter End, _______