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Which TWO of the following audit procedures would help to determine whether management has identified all accounting estimates that could be material to the financial statements?
A. Inquire about the existence of any subsequent events
B. Review communications with lawyers for information about litigation
C. Confirm inventory held by third parties
D. Determine whether accounting estimates deviate from historical patternsWhy option D isnot the answer??
The Q stem has the key word “all” – i.e. the relevant assertion is completeness. D would be relevant to assessing the reasonableness of amounts – i.e. valuation – not whether all have been identified.
If this is from a source that does not have answer justifications, I recommend you don’t use it – there is a lot of valid Q practice that will be more helpful to your studies and revision. Are you using our end-of-chapter quiz questions? And those in the ACCA Study Hub?
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