It is management's responsibility to select the accounting policies that are used in the preparation of the financial statements.What is the auditor's responsibility with respect to these accounting policies?
A)Approve the accounting policies that are used,so that an opinion can be stated on the fairness of the financial statements.
B)Evaluate the appropriateness of the accounting policies that are used and of the associated estimates made.
C)Tell management which accounting policies should be selected so that accurate estimates can be made for year-end adjustments.
D)Recalculate the estimates that are used for the accounting policies (such as bad debt allowance and warranty expenses).

Question

Quizplus · Accepted Answer

The auditor's responsibility is to evaluate the appropriateness of the accounting policies that are used and of the associated estimates made to ensure that they are in accordance with accounting standards and reflect the economic substance of transactions. The auditor does not have the responsibility to tell management which accounting policies to select or to recalculate estimates made by management. The approval of accounting policies is also not the responsibility of the auditor, as they must remain independent and unbiased in their evaluation of the financial statements.

It Is Management's Responsibility to Select the Accounting Policies That