Auditing Accounting Estimates (A4S3)

Overview

As you advance in your audit careers, your responsibilities include auditing more subjective areas, such as accounting estimate. These estimates are pervasive across a set of financial statements and are often very sensitive to relatively small changes in assumptions, which can have a significant impact on the amount of the estimate that is recorded, or not recorded, in the financial statements. In this session, we will review the relevant auditing guidance related to auditing estimates. We will focus on the three key ways in which auditors can audit accounting estimates: waiting for the contingency to resolve itself, auditing the client’s estimation process, and developing the auditor’s point or range of estimate. Then we’ll review what will be changing, and what will be staying the same, when SAS 143 becomes effective for 2023 audits. (Please Note: This module is part of Surgent's Audit Skills Training: Level 4.)

Major Topics:

• Common accounting estimates
• Accounting guidance related to loss and gain contingencies
• Audit guidance related to auditing accounting estimates
• Overview of the requirements of SAS 143

Learning Objectives:

• Identify the provisions found in AU-C 540 related to auditing estimates
• Identify key differences between AU-C 540 and the new requirements for auditing estimates under SAS 143