Choice "A" is correct. In evaluating the reasonableness of an estimate, the auditor must first obtain an understanding of how management developed its estimate.
Choices "d", "c", and "b" are incorrect. After obtaining an understanding of how management developed its estimate, the auditor would perform one or a combination of the following procedures:

1. Review subsequent events and transactions (occurring prior to completion of fieldwork) that corroborate the value of the estimate (choice "d").

2. Develop an independent estimate of the item for comparative purposes (choice "c").

3. Review and test the procedures used by management to develop the estimate (choice "b").