When assessing the risk of material misstatement,auditors evaluate the reasonableness of an entity's accounting estimates.An auditor normally would be concerned about assumptions that are
A) Susceptible to bias.
B) Consistent with prior periods.
C) Insensitive to variations.
D) Similar to industry guidelines.

Question

Quizplus · Accepted Answer

When assessing the risk of material misstatement, auditors are concerned about assumptions that are susceptible to bias. Biases may cause accounting estimates to be incorrect, which may lead to material misstatements. Therefore, auditors must evaluate the reasonableness of an entity's accounting estimates, and they may consider the presence of assumptions that may be affected by biases.

When Assessing the Risk of Material Misstatement,auditors Evaluate the Reasonableness