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NEW QUESTION: 1

A. Option A
B. Option B
C. Option C
Answer: A

NEW QUESTION: 2
Which of the following is an appropriate role for the board in governance?
A. Assisting the internal audit activity in performing annual reviews of governance.
B. Working with the organization's attorneys to develop a strategy regarding current litigation, pending litigation, or regulatory proceedings governance.
C. Ensuring that financial statements are understandable, transparent, and reliable.
D. Preparing written organizational policies that relate to compliance with laws, regulations, ethics, and conflicts of interest.
Answer: C

NEW QUESTION: 3
Which of the following procedures would an auditor ordinarily perform first in evaluating management's
accounting estimates for reasonableness?
A. Test the calculations used by management in developing the estimates.
B. Obtain an understanding of how management developed its estimates.
C. Consider the appropriateness of the key factors or assumptions used in preparing the estimates.
D. Develop independent expectations of management's estimates.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Choice "D" is correct. In evaluating the reasonableness of an accounting estimate, the auditor should first
obtain an understanding of how management developed its estimate.
Choice "A" is incorrect. After first obtaining an understanding of how management developed its estimate,
the auditor should use one or a combination of the following approaches: a) review and test the process
used by management to develop the estimate, b) develop an independent expectation of the estimate to
corroborate the reasonableness of management's estimate, or c) review subsequent events.
Choice "B" is incorrect. After having first obtained an understanding of how management developed its
estimate, the auditor should consider testing management's process by assessing the appropriateness of
the key factors or assumptions used in preparing the estimate.
Choice "C" is incorrect. After first obtaining an understanding of how management developed its estimate,
the auditor should use one or a combination of the following approaches: a) review and test the process
used by management to develop the estimate, b) develop an independent expectation of the estimate to
corroborate the reasonableness of management's estimate, or c) review subsequent events.

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