Which of the following best describes the auditors' responsibility with respect to management's estimates?
A) Verifying the mathematical accuracy of management estimates.
B) Assessing the likelihood that actual results will be consistent with management's estimates.
C) Evaluating the reasonableness of management's estimates.
D) Identifying how the entity's failure to achieve management's estimates will influence users' decisions.

Question

Quizplus · Accepted Answer

Auditors are responsible for evaluating the reasonableness of management's estimates. This involves assessing whether the estimates are based on appropriate assumptions and are presented in conformity with generally accepted accounting principles (GAAP) or other applicable financial reporting framework. The auditors' responsibility is not to verify the mathematical accuracy of management's estimates or predict whether actual results will be consistent with management's estimates. Similarly, while auditors may consider the potential impact of deviations from management's estimates on users' decisions, their primary responsibility is to evaluate the reasonableness of the estimates themselves.

Which of the Following Best Describes the Auditors' Responsibility with Respect