Area III: Performing Procedures — CPA Practice Question 17

How to approach this question

Recall AU-C 500/540. The auditor is responsible for the opinion. They must 'look under the hood' of the specialist's work (Methods, Assumptions, Data).

Full Answer

B.Evaluate the appropriateness of the valuation model used and the reasonableness of the significant assumptions.✓ Correct

Evaluate the appropriateness of the valuation model used and the reasonableness of the significant assumptions.

When using the work of a management's specialist, the auditor must evaluate the competence, capabilities, and objectivity of the specialist; obtain an understanding of the work; and evaluate the appropriateness of that work as audit evidence (checking assumptions, methods, and source data).

Common mistakes

Thinking the auditor can just accept the specialist's number; thinking the auditor mentions the specialist in the report.

How to approach this question

Full Answer

Common mistakes

Practice the full CPA AUD Practice Exam 3

More questions from this exam