The International Auditing and Assurance Standards Board ('IAASB') has published a consultation on a proposal to revise its standard for the audit of accounting estimates and related disclosures (ED-540), available here. The proposal will apply to the audit of all accounting estimates and has been developed to support the audit of expected credit losses in banks following the introduction of revised accounting standards.
Auditors will need to fulfil more stringent requirements when signing off ‘accounting estimates’ in financial statements. The revised audit approach mandates an enhanced risk assessment, and increased work to determine the effect on an estimate of uncertainty, complexity and judgements taken by management. It will also require the auditor to apply greater professional scepticism, and to carry out a further final review of the audit work in connection with the estimate before the audit is completed. Less detailed procedures apply when the risk of material misstatement is low.
IAASA will respond directly to the IAASB’s consultation and may in due course update its Irish standard in line with the IAASB’s final standard. To help inform IAASA’s response, the Authority is seeking submissions from interested parties. These submissions should be sent by email to [email protected] by 01 June 2017.