Which of the Following Procedures Would an Auditor Ordinarily Perform

question 495

Multiple Choice

Which of the following procedures would an auditor ordinarily perform first in evaluating the reasonableness of management's accounting estimates?

• A) Review transactions occurring prior to the completion of field work that indicate variations from expectations.
• B) Compare independent expectations with recorded estimates to assess management's process.
• C) Obtain an understanding of how management developed its estimates.
• D) Analyze historical data used in developing assumptions to determine whether the process is consistent.

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Definitions:

High Expectation

A strong belief that something will happen or be the case in the future, often greater than standard norms.

Downsizes

The act of reducing the number of workers in a company as a cost-saving measure or because of restructuring needs.

Core Self-Evaluations

A personality trait which reflects an individual's fundamental assessments about themselves, their abilities, and their control over their environment.

Negative Affectivities

Emotional states or attitudes characterized by negativity, including feelings of distress, dissatisfaction, and pessimism.