Accounting Estimates, Including Fair Value – Evaluating the Propriety of Areas with Uncertainty

Accounting estimates are an approximation of a monetary amount in the absence of a precise means of measurement. The risks of material misstatement for areas of estimation tend to be higher due to the dependence on future events and the intended actions of management. This module will discuss tips and techniques for gathering sufficient appropriate audit evidence to support conclusions related to accounting estimates.

Major Topics:

• Identifying areas of estimation uncertainty, including fair value measurements.
• Assessing risk of material misstatement related to estimates, and testing the estimation process.
• The fair value measurement process, including non-readily marketable securities.
• Applying audit procedures to common areas of estimation.
• Evaluating the results of audit procedures for possible audit adjustment.