In "Amortize the 'Drum' Slowly", Candid Production overvalued net assets by taking too little amortization. Which of the following was the lesson for the auditors in this case?
A) Check the client's calculations regardless of how simple they appear.
B) Understand special industry accounting before accepting an engagement.
C) Maintain professional skepticism when evaluating a client's accounting estimates.
D) Always investigate a client's background before accepting an engagement.

Question

Quizplus · Accepted Answer

The lesson for auditors in this case is to maintain professional skepticism when evaluating a client's accounting estimates, as Candid Production overvalued net assets by taking too little amortization. It is important for auditors to critically evaluate and question the accounting estimates provided by clients, and exercise professional judgment to ensure that the financial statements are fairly presented. The other choices (A, B, D) are not directly relevant to the lesson learnt in this case.

In "Amortize the 'Drum' Slowly", Candid Production Overvalued Net Assets