Auditors' test of controls over the production of estimate amounts is limited to a comparison of past estimates compared to actual amounts.

Question

Quizplus · Accepted Answer

While auditors may use past estimates and actual amounts as a part of their testing, their test of controls over the production of estimate amounts should include a wider range of procedures to assess the effectiveness of the control environment and internal controls related to estimate amounts. This may include a review of the methodologies used in developing estimates, understanding the qualifications and expertise of individuals involved in the process, evaluating the accuracy and completeness of underlying data used to develop estimates, and testing the reasonableness of estimates using independent sources of information.

Auditors' Test of Controls Over the Production of Estimate Amounts