With reference to the accounting estimates (given under Para 2) that might give rise to significant risks, what Mr. Kailash should have evaluated in…

(a) 6 As per SA 540, ‘Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures', for accounting estimates that give rise to significant risks, in addition to other substantive procedures performed to meet the requirements of SA 330, the auditor shall evaluate the following: (a) How management has considered alternative assumptions or outcomes, and why it has rejected them, or how management has otherwise addressed estimation uncertainty in making the accounting estimate. (b) Whether the significant assumptions used by management are reasonable. (c) Where relevant to the reasonableness of the significant assumptions used by management or the appropriate application of the applicable financial reporting framework, management's intent to carry out specific courses of action and its ability to do so. In the given instance, Mr. Kailash should have evaluated the aforesaid points, in addition to performing procedures as per SA 330.