Acg 6636-0001 - Reflection Class 11

ACG 6636-0001

29 March 2017

Reflection Paper: Week 11

The principle themes that I took away from the cases this week are auditing estimates and auditing fair value standards. In the ACU standard paper expands on how section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained; and other relevant AU-C sections are to be applied with regard to accounting estimates. The AH (2006) paper discusses implications of academic research that should be relevant to auditors, standard setters, and academics who increasingly deal with the complexities of auditing fair value measurements.

As discussed in the AU-C paper some financial statement items cannot be measured precisely but can only be estimated. These numbers are numbers that management relies on for many decisions however there are risks of material misstatement of accounting estimates, including their susceptibility to unintentional or intentional management bias. There are many factors that go into the estimates depending on the framework. There is a chance that the estimate can have changes and that doesn’t mean that it is a misstatement rather, it could be an outcome of estimation uncertainty.