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Chapter 113 4

6.3 Audit procedures

 Determining whether events up to the date of the auditor's report provide
additional evidence with regard to the appropriateness of estimates.

 Testing how management made their estimates and evaluating whether the
method is appropriate.

 Testing the effectiveness of controls over estimations.

 Developing a point estimate to use in comparison to managements'.

 If there are significant risks associated with estimates the auditor should also
enquire whether management considered any alternative assumptions and why
they rejected them and whether the assumptions used are reasonable in the
circumstances.

 Obtain written representations from management confirming that they believe
the assumptions used in making estimates are reasonable.

 Verify the external prices used to value financial instruments.

Illustrations and further practice

Now try Exam style question in Chapter 11

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