Final answer:
In the case of an audit where there is disagreement with management over the estimation of collectible accounts receivable and the misstatement is material, the auditor's professional judgment should weigh more heavily.
The auditor must ensure financial statements are free of material misstatements, even if it means challenging management's expertise and requiring modification of the financial statements, if necessary.
Step-by-step explanation:
During the audit of Moon Co., the auditor's disagreement with management's estimation of collectible accounts receivable where the possible misstatement is material should primarily weigh on the auditor's professional judgment. The auditor's duty is to provide an objective, unbiased opinion on the financial statements.
If the auditor's professional judgment indicates that the accounts receivable estimate is not reasonable, they should gather more evidence and, if necessary, insist on a modification of the financial statements or issue a qualified or adverse opinion.
While management's expertise is valuable for business operations, it is the auditor's responsibility to review and, if needed, challenge the estimates made by management to ensure that the financial statements are free of material misstatement.
Furthermore, materiality of the misstatement plays a significant role, as material errors can affect the decision-making process of users of financial statements. Management's representation letter is important in the audit process, but it does not override the auditor's professional judgment when there are indications that the financial statements may be materially misstated.