CPA LogoCPA Exam Prep

Auditing Accounting Estimates

How Auditors Evaluate Estimates

Auditors evaluate whether accounting estimates are reasonable and free from management bias. They assess the assumptions used, evaluate supporting data, and compare prior estimates with actual outcomes.

Note
Consistent optimism or pessimism in management estimates may indicate management bias.
Summary
Auditors assess both the reasonableness of assumptions and the potential for management bias.