Page 138 - Internal Auditing Standards

11. Accounting Estimates

Chapter Content Relevant ISAs
Audit procedures relating to the audit of accounting estimates, 540
including fair value accounting estimates and related disclosures in an
audit of fi nancial statements.

Exhibit 11.0-1

What estimates are required?
How were the estimates prepared?
Risk Assessment How significant are the estimates? Risk Response Have estimates been prepared properly
using consistent methodology?
Is an auditor’s expert required?
Is the supporting evidence reliable?
How accurate were the prior year’s
Any evidence of fraud?
estimates?
Any evidence of management bias?
Extent of estimation uncertainty involved?

Are financial statement disclosures
of accounting estimates in accordance with
Reporting the financial reporting framework?
If a significant risk, has disclosure been
made of the estimation uncertainty?
Obtain management representations.

Paragraph # ISA Objective(s)

540.6 The objective of the auditor is to obtain sufficient appropriate audit evidence about whether:

(a) accounting estimates, including fair value accounting estimates, in the fi nancial
statements, whether recognized or disclosed, are reasonable; and
(b) related disclosures in the financial statements are adequate,

in the context of the applicable financial reporting framework.

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