During the audit of Moon Co., the auditor disagrees with management's estimation of collectible accounts receivable. The possible misstatement amount is material. Which of the statements below should weigh more heavily for the auditor in this instance?
- Moon management has the right to make company estimates.
- Requiring an adjustment to the allowance for doubtful accounts would give stockholders access to fair and adequate information.
- Accounts Receivable as stated by Moon Co., might turn out to be fully collectible.
- The interests of Moon Co., the auditor, and the public should be weighed equally in the decision.
Accounting
B. Requiring an adjustment to the allowance for doubtful accounts would give stockholders access to fair and adequate information.
need an explanation for this answer? contact us directly to get an explanation for this answerExplanation: The auditor's duty is to assess whether the financial statements present fairly. Thus, the auditor must recommend an adjustment and, if the proposed adjustment is not made, indicate a material misstatement of accounts receivable in her/his qualified audit opinion. Yes, it really is that simple.