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CMA Intermediate · Corporate Accounting and Auditing · Brief Introduction to Auditing Standards

Under SA 200, how can the auditor's professional judgment be evaluated?

Professional judgment is evaluated by whether it reflects a competent application of auditing and accounting principles and is appropriate in light of, and consistent with, the facts and circumstances known to the auditor up to the date of the auditor's report, not later hindsight.

  1. ABy whether the auditor's conclusion matches the management's accounting estimate
  2. BBy whether the judgment reflects a competent application of auditing and accounting principles and is appropriate in light of facts known to the auditor up to the date of the auditor's reportCorrect
  3. CBy whether the judgment is supported by the facts that became known after the date of the auditor's report
  4. DBy whether the audit fee charged is proportionate to the judgment exercised

Explanation

SA 200 states that professional judgment is evaluated on whether it reflects a competent application of auditing and accounting principles and is appropriate and consistent with the facts and circumstances known up to the date of the auditor's report. Option C is wrong because hindsight facts after that date are not the test.

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