Which of the Following Is Not an Approach an Auditor

question 28

Multiple Choice

Which of the following is not an approach an auditor may choose when performing substantive procedures to test accounting estimates?

• A)Test the company's process used to develop the accounting estimate.
• B)Confirm the accounting estimate with a reliable third party expert.
• C)Develop an independent expectation for comparison to the company's estimate.
• D)Evaluate audit evidence from events or transactions occurring after the measurement date.

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Definitions:

Voting Stock

Shares that give the shareholder the right to vote on important company decisions, essentially similar to voting common stock but may include different classes of stock.

Variable Interest Entities (VIEs)

A legal entity in which an investor holds a controlling interest that is not based on the majority of voting rights but rather on contractual or ownership arrangements.

Equity Ownership

The holding of shares in a company, giving the shareholder ownership rights and potentially entitlements to dividends and voting powers.

Adjusted Subsidiary Value

The value of a subsidiary after adjustments have been made for fair value of assets and liabilities, often calculated during the consolidation process.