The revised ASA 540 Auditing accounting estimates and related disclosures is operative and will affect all audit team members.
ASA 540 has been significantly revised to keep pace with developments in financial reporting. In particular, the use of more forward-looking information in the expected credit-loss basis for financial instruments, in revenue recognition and insurance contracts. These innovations have led to an increase in the volume and complexity of accounting judgements and related disclosures. All require an auditor’s response.
The session will:
- Describe how audit planning and audit evidence is affected
- Identify the changes to audit nature, timing and the extent of audit procedures
- Describe steps and documentation for assessing the adequacy of disclosures, and
- Identify what we need from preparers and what we need to tell governance.