Explanation Financial statements are generally having some estimates, assumptions and appraisals as practically at the yearend not all figures are known to the management. It is the duty of the Auditor to see whether a genuine, independent and logical process has been followed for arriving at such estimates and these estimates are aligned with the history of transactions and logical. Sometimes, management tries to use these estimates in misguiding the government agencies and outsiders so as to do some fraudulent transactions which are hidden behind these estimates. Management very well knows that nobody is going to verify the same as it has already been tagged as Estimates...

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN: 9781337619455

Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher: Cengage Learning

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Question

Chapter 6, Problem 20RQSC

To determine

Introduction: Auditor is supposed to understand the process which is followed to arrive at management estimates.

To understand: Auditor comes across certain estimates considered by the management, which he has to understand by proper study of the processes followed by the management for the same.

Expert Solution & Answer

Chapter 6 Solutions

Auditing: A Risk Based-Approach (MindTap Course List)

Ch. 6 - Prob. 1CYBK Ch. 6 - Prob. 2CYBK Ch. 6 - Prob. 3CYBK Ch. 6 - Which of the following statements is true...Ch. 6 - Prob. 5CYBK Ch. 6 - Prob. 6CYBK Ch. 6 - Prob. 7CYBK Ch. 6 - Prob. 8CYBK Ch. 6 - Prob. 9CYBK Ch. 6 - Prob. 10CYBK

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Auditor is supposed to understand the process which is followed to arrive at management estimates. To understand: Auditor comes across certain estimates considered by the management, which he has to understand by proper study of the processes followed by the management for the same.

Solution Summary: The author explains that the auditor must understand the process followed by the management to arrive at management estimates.

Introduction: Auditor is supposed to understand the process which is followed to arrive at management estimates. To understand: Auditor comes across certain estimates considered by the management, which he has to understand by proper study of the processes followed by the management for the same.

Chapter 6 Solutions

Introduction: Auditor is supposed to understand the process which is followed to arrive at management estimates.

To understand: Auditor comes across certain estimates considered by the management, which he has to understand by proper study of the processes followed by the management for the same.