According to Savage and Van Allen,what is the problem with using the average or expected value of a distribution as a point estimate for a distribution of values?
A)It is too costly to develop such estimates.
B)When sufficient estimation uncertainty exists,use of such estimates can lead to misleading results.
C)It adds too much complexity to the audit process
D)It eliminates the auditor's need to exercise professional judgement.

Question

Quizplus · Accepted Answer

When there is sufficient estimation uncertainty, using the average or expected value of a distribution as a point estimate can lead to misleading results. It is because the estimate is based on assumptions and may not reflect the true value of the parameter being estimated. Therefore, alternative methods, such as using conservative point estimates or considering a range of possible outcomes, may be more appropriate in situations with high estimation uncertainty.

According to Savage and Van Allen,what Is the Problem with Using