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what audit procedure auditor should perform to identify the reasnableness of estimate made by mangemnt,??
Ask them how they arrived at it.
Reperform their calculations.
Verify any source data they used.
Inspect any supporting documentation (eg when estimating a contingent liability).
Review the reasonableness of any assumptions in line with industry knowledge etc.
Apply analytical procedures where possible (eg allowances for irrecoverable debts compared to last year’s provision).
Refer to the estimate in the letter of representation.
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