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Auditing Accounting Estimates

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Introducing the revised standard

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Introducing the revised ISA 540

What does the revised standard cover?
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Key changes introduced in the revised ISA 540

Understand the main changes.
Find out more

Latest news

Exclusive What good looks like – Audit of accounting estimates
  • Helpsheets and support
  • 26 Jul 2022
Auditing accounting estimates - depreciation and fixed assets
  • Webinar
  • 13 Jan 2022
Exclusive Auditing accounting estimates - identifying specific risks
  • Webinar
  • 19 Jan 2022
Exclusive Auditing accounting estimates - property valuations
  • Webinar
  • 19 Jan 2022
Exclusive Auditing accounting estimates - provisions
  • Webinar
  • 20 Jan 2022

What is an accounting estimate?

Exclusive What is an accounting estimate? Considerations for auditors
  • Helpsheets and support
How to spot accounting estimates and not overlook the more obvious ones in your audit.
IAS 8 Accounting Policies
  • Hub page
IAS 8 prescribes criteria for the selection of accounting policies. It also clarifies when a change in accounting policy is acceptable and provides guidance on the accounting treatment of such changes, as well as changes in accounting estimates and errors.
IFRS 9 Financial Instruments
  • Hub page
IFRS 9 sets out the requirements for recognising and measuring financial assets, financial liabilities, and some contracts to buy or sell non-financial items.

Identifying and assessing risk

How are accounting estimates picked up in risk assessments?
  • Article
Understanding the entity, its environment and internal controls.
Are all estimates equal?
  • Article
Assessing inherent and control risk.

Inherent risk

Exclusive Inherent risk factors in auditing accounting estimates
  • Helpsheets and support
What are they and how might they influence your audit of accounting estimates.
The spectrum of inherent risk
  • Article
Understanding the new concept and how this can be applied.
Exclusive Determining high estimation uncertainty and significant risk
  • Helpsheets and support
How to identify whether any risks of material misstatement identified give rise to significant risks.

Responding to assessed risk

How does the auditor respond to assessed risks?
  • Article
Determining a proportionate approach.
Demonstrating professional scepticism when auditing estimates
  • Article
Inherent risk factors and enhanced requirements.

Documentation

Exclusive Documenting the audit of accounting estimates under ISA 540 (Revised)
  • Helpsheets and support
Understanding what needs to be documented and when.

IAASB resources

Simple and complex accounting estimates examples
ISA 540 (revised) implementation: illustrative examples for auditing simple and complex accounting estimates
Expected credit loss accounting estimates examples
ISA 540 (revised) implementation: illustrative examples for auditing expected credit loss accounting estimates
Requirements, testing approaches and linkages
ISA 540 (revised) implementation support: flow charts and diagram

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Exclusive Accounting estimates
  • eBook chapter
  • 2024
  • Steve Collings
  • An Auditors Guide to Auditing Financial Statements in the UK
A section on auditing accounting estimates under ISA (UK) 540, covering risk assessment, estimation uncertainty, management bias, audit procedures, evaluation of estimates and related disclosures, and documentation requirements.
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Exclusive Accounting estimates
  • eBook chapter
  • 2024
  • Steve Collings
  • An Auditors Guide to Auditing Financial Statements in the UK
A section on auditing accounting estimates under ISA (UK) 540, covering risk assessment, estimation uncertainty, management bias, audit procedures, evaluation of estimates and related disclosures, and documentation requirements.
Terms of use

You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the terms of use set by our suppliers and any restrictions imposed by individual publishers. Please see individual supplier pages for full terms of use.

Further resources

Professional scepticism is a topic that is heavily debated within and outside the accountancy profession.

Professional scepticism
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Information

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