ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures

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ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures The International Auditing and Assurance Standards Board (IAASB) revised its standard on accounting estimates, ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures, to respond to the rapidly evolving business environment. In finalizing ISA 540 (Revised), the Board focused on the scalability of the ISA to very simple accounting estimates as well as the most complex accounting estimates. The Board also clarified the relationship between ISA 540 (Revised) and other ISAs, and using the work of a management’s expert as audit evidence in testing how management made the accounting estimate. The Board recognized that support of the implementation of ISA 540 (Revised) is important and therefore supported the formation of an implementation working group. The Board will monitor implementation challenges as they arise and also committed to a post-implementation review. The revised ISA will be effective for audits of financial reporting periods beginning on or after December 15, 2019. Early adoption is permitted and encouraged.