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There is a natural bias for All Starr to understate liabilities, especially considering a potential initial public offering. The inherent bias and the professional judgment
There is a natural bias for All Starr to understate liabilities, especially considering a potential initial public offering. The inherent bias and the professional judgment required to estimate the warranty liability results in a high risk of material misstatement for this account. Account and Assertion Warranty liability: completeness Procedures In order to address this risk, the auditors could: Compare the prior-year provision with the current year's actual expenditure on warranty claims to assess whether the previous period's provision was reasonable. Compare the current-year warranty provision with prior years' provisions and discuss any fluctuations with the person responsible for preparing the estimated provision, to
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