Every set of financial statements contain a number accounting estimates, be it useful lives for PPE or fair valuation of financial instruments, and auditors need to have a clear plan of action to address their accuracy during each audit engagement.
Not only this, but estimates are considered a fraud risk, meaning auditors have to carry out compulsory audit procedures on accounting estimates for management bias.
We want to help you understand how to approach accounting estimates during your audit engagement using Draftworx’ RAC template to ensure you meet the audit requirements set out in ISA 540 Estimates and ISA 240 Fraud.
- Simplify and summarise the requirements of ISA 540 Auditing Estimates and ISA 240 Fraud (focusing on accounting estimates)
- Make the audit requirements from ISA 540 and ISA 240 as practical as possible
- Introduce and walk you through the relevant documents in the Draftworx RAC template:
o 12.10 Understanding the Nature of the Entity
o 12.80 ISA 540 Considerations
o Estimates working papers, e.g., 30.15.01 PPE Estimates
o 03.06 Final Estimates Summary
