The client makes estimates relative to recorded amounts in the financial statements. Which of the following assumptions best represents the auditor's primary focus regarding the reasonableness of such estimates?
A) That historical trends are followed.
B) That income is managed.
C) That there is an adequate cushion.
D) That management reverses estimates when opportune.

Question

Quizplus · Accepted Answer

The auditor's primary focus regarding the reasonableness of estimates made by the client is to ensure that they are consistent with historical trends and are not excessively aggressive or conservative. This helps ensure that the financial statements are fairly presented and not misstated. The other choices (B, C, and D) are not assumptions that the auditor should make regarding estimates made by the client.

The Client Makes Estimates Relative to Recorded Amounts in the Financial