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SAS No. 56 Auditing Accounting Estimates
And Related Disclosures
Status
Issued by Auditing Standards Committee in Taiwan on 11 November,
2014
Summary
This Statement deals with the auditor’s responsibilities relating
to accounting estimates, including fair value accounting estimates,
and related disclosures in an audit of financial statements.
When performing risk assessment procedures and related activities to
obtain an understanding of the entity and its environment, including
the entity’s internal control, the auditor shall obtain an
understanding of the matters for accounting estimates in order to
provide a basis for the identification and assessment of the risks
of material misstatement for accounting estimates.
In identifying and assessing the risks of material misstatement, the
auditor shall evaluate the degree of estimation uncertainty
associated with an accounting estimate and determine whether, in the
auditor’s judgment, any of those accounting estimates that have been
identified as having high estimation uncertainty give rise to
significant risks. For accounting estimates that give rise to
significant risks, the auditor shall evaluate the following:(a)how
management has considered alternative assumptions or outcomes (b)whether
the significant assumptions used by management are reasonable (c)management’s
intent to carry out specific courses of action and its ability to do
so.
The auditor shall evaluate, based on the audit evidence, whether the
accounting estimates in the financial statements are either
reasonable in the context of the applicable financial reporting
framework, or are misstated.
The auditor shall obtain sufficient appropriate audit evidence about
whether the disclosures in the financial statements related to
accounting estimates are in accordance with the requirements of the
applicable financial reporting framework.
The auditor shall review the judgments and decisions made by
management in the making of accounting estimates to identify whether
there are indicators of possible management bias. The auditor shall
obtain written representations from management and, where
appropriate, those charged with governance whether they believe
significant assumptions used in making accounting estimates are
reasonable.
The auditor shall include in the audit documentation: (a) the basis
for the auditor’s conclusions about the reasonableness of accounting
estimates their disclosure that give rise to significant risks (b)
indicators of possible management bias.
Effective date
This Statement is effective from 1 January, 2016. |
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