The client makes estimates relative to recorded amounts in the financial statements.In determining the reasonableness of these estimates the auditor should consider which of the following?
A)Historical trends and information.
B)Results of reconciliation procedures.
C)That there is an adequate cushion.
D)That management hired independent experts to quantify all estimates .

Question

Quizplus · Accepted Answer

In determining the reasonableness of estimates, the auditor should consider historical trends and information, such as past performance or industry standards. Results of reconciliation procedures can provide supporting evidence for the estimates, but they alone are not sufficient. The concept of an "adequate cushion" is not applicable to the evaluation of estimates. The fact that management hired independent experts may be a positive factor, but the auditor still has a responsibility to evaluate the reasonableness of the estimates.

The Client Makes Estimates Relative to Recorded Amounts in the Financial