Which of the following is required of an auditor who is testing the fair value of options in share-based compensation?
A)Using a specialist.
B)Testing the inputs used in the valuation model.
C)Becoming an expert in option-pricing.
D)Using the work of the internal audit function.

Question

Quizplus · Accepted Answer

When testing the fair value of options in share-based compensation, the auditor is required to test the inputs used in the valuation model to ensure they are accurate and appropriate. This may involve obtaining an understanding of the valuation model used and evaluating the significant assumptions and inputs used in the model. Using a specialist or becoming an expert in option-pricing may be helpful but is not mandatory. Using the work of the internal audit function may be useful but is not a requirement in this specific case.

Which of the Following Is Required of an Auditor Who