When auditing accounting estimates, ASA 540 (ISA 540) suggests all of the following approaches except:
A) review and test the process used by management to develop the estimate.
B) use an independent estimate for comparison.
C) rely on management's representation.
D) review subsequent events.

Question

Quizplus · Accepted Answer

ASA 540 (ISA 540) emphasizes the need for auditors to critically assess and, if necessary, independently verify accounting estimates made by management, rather than simply relying on management's representations.

When Auditing Accounting Estimates, ASA 540 (ISA 540) Suggests All