An auditor might test the reasonableness of the client's estimate of the allowance for doubtful accounts by developing an independent estimate of the allowance for doubtful accounts that is compared to the recorded allowance.

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This statement is true. An auditor may develop an independent estimate of the allowance for doubtful accounts to test the reasonableness of the client's estimate, which can then be compared to the recorded allowance to determine if any adjustments are necessary.

An Auditor Might Test the Reasonableness of the Client's Estimate