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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.
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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 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 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.

Further resources

Learn about the auditing implications of the Coronavirus (COVID-19) pandemic.

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

Coronavirus (COVID-19) Professional scepticism
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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
COVID-19
Auditing accounting estimates in the current evolving environment due to covid-19