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FAQs on revised CAS 540, auditing estimates

Looking for answers to common questions about implementing revised CAS 540, Auditing Accounting Estimates and Related Disclosures? Check out our free resource for practitioners.

This FAQ document provides you with a series of questions identified during exposure of proposed CAS 540, where outreach activities identified potential implementation risks or areas that may need further clarification.

It includes questions related to areas such as:

  • using data from information sources outside the entity's accounting system
  • using the work of an auditor's expert
  • evaluating management bias
  • assessing the degree to which an estimate is affected by inherent risk factors
  • developing your own estimate or range

Note: This FAQ has been updated to reflect changes as a result of revised CAS 315, Identifying and Assessing the Risk of Material Misstatement. Revised CAS 315 is effective for audits of financial statements for periods beginning on or after December 15, 2021.