The auditor's knowledge of the client's business is important when auditing management's judgements in evaluating whether a long-lived asset is impaired or not, including estimating fair value of these assets.

Question

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The auditor's knowledge of the client's business is important when auditing management's judgements in evaluating whether a long-lived asset is impaired, including estimating fair value of these assets. This is because the auditor needs to understand the nature and characteristics of the business operations and the industry in which the client operates to be able to assess the reasonableness of the management's judgments related to the impairment of long-lived assets.

The Auditor's Knowledge of the Client's Business Is Important When