For accrued liabilities, the audit approach emphasizes a review and test of mana

Question

For accrued liabilities, the audit approach emphasizes a review and test of management's process of developing the accounting estimates. Which of the following auditing 23. procedures meets the specific audit objective of completeness for accrual liabilities? a. Identify and evaluate the reasonableness of the assumptions made that underlie the computation of the accrual liabilities b. Test the computations made by the management in setting up the accrual liabilities. c. Consider the need for accrual of other accrued liabilities not presently considered d. Perform a retrospective analysis of the prior year's accrual liabilities for evidence of management bias.

Explanation / Answer

For accured liabilities, the auit approach emphasizes a review and test of management's process of developing the accounting estimates, the following auditing proceures meets the specific audit objective of completeness for accural liabilities =

Answer = B) Test the computations made by the management in setting up the accrual liabilities.

In process of Review and test of management's process of developing the accouting esimates, the auditor should Review and test the process used by management to develop the estimate. and then, Develop an independent expectation of the estimate to corroborate the reasonableness of management's estimate.

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