- This topic has 1 reply, 2 voices, and was last updated 10 years, 1 month ago by
.
-
Topic
-
The auditor considers the following procedures among others in evaluating whether management has identified all accounting estimates that could be material to the financial statements except for:
A.
substantive procedures.
B.
inquiry of management.
Incorrect C.
information from available minutes.
D.
changes made to the entity’s business, including operating strategy, and the industry in which the entity operates.
A. In evaluating whether management has identified all accounting estimates that could be material to the financial statements, the auditor considers the circumstances of the industry or industries in which the entity operates, its methods of conducting business, new accounting pronouncements, and other external factors. The auditor should consider performing the following procedures:
Consider assertions embodied in the financial statements to determine the need for estimates.
Evaluate information obtained in performing other procedures, such as the following:
Information about changes made or planned in the entity’s business, including changes in operating strategy, and the industry in which the entity operates that may indicate the need to make an accounting estimate
Changes in the methods of accumulating information
Information concerning identified litigation, claims, and assessments, and other contingencies
Information from reading available minutes of meetings of stockholders, directors, and appropriate committees
Information contained in regulatory or examination reports, supervisory correspondence, and similar materials from applicable regulatory agencies
Inquire of management about the existence of circumstances that may indicate the need to make an accounting estimate.
Substantive procedures are performed to detect material misstatements. So wouldn’t they also be useful in detecting material accounting estimates?
- The topic ‘Substantive procedures’ is closed to new replies.
