PCAOB adopts new estimates standard and amendments

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Dec 20, 2018

On December 20, 2018, the Public Company Accounting Oversight Board (PCAOB) adopted a new standard, “Auditing Accounting Estimates, Including Fair Value Measurements and Amendments to PCAOB Auditing Standards,” and amendments to its auditing standards, “Amendments to Auditing Standards for Auditor's Use of the Work of Specialists.”

The new standard “replaces three standards with a single, uniform standard that sets forth an updated approach to auditing accounting estimates. It emphasizes that auditors need to apply professional skepticism, including addressing potential management bias, when auditing accounting estimates. Additionally, the new standard provides more specific direction on auditing fair values of financial instruments that are based on information from third-party pricing sources.”

The amendments “strengthen the requirements for evaluating the work of a company's specialist, whether employed or engaged by the company. They also apply a supervisory approach to both auditor-employed and auditor-engaged specialists.”

Review the press release, standard, and amendments on the PCAOB’s website.

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