New ISA on audits of accounting estimates
19 Feb 2008
The International Auditing and Assurance Standards Board (IAASB) has issued International Standard on Auditing (ISA) 540 (Revised and Redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures.
ISA 540 requires the auditor to focus attention on areas of higher risk, accounting judgement, and possible bias, thereby assisting the auditor to form appropriate conclusions about the reasonableness of estimates in the context of an entity's financial reporting framework. The ISA provides expanded guidance on auditing fair value accounting estimates, including audit considerations relating to the proper application of the requirements of the financial reporting framework relevant to such estimates and the use of models in valuations. ISA 540 is effective for audits of financial periods commencing on or after 15 December 2009. The IAASB has also decided to establish a Task Force to consider how best to approach the development of possible further fair value auditing guidance. Click for Press Release (PDF 65k).
