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AUDITING
The PCAOB published a staff audit practice alert on auditing fair value measurements in financial statements.

“We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects on the markets and fair value measurements, and certain issues that might arise in the transition” to FASB Statement no. 157, Fair Value Measurements , Marty Baumann, director of the PCAOB Office of Research and Analysis, said in a news release.

The alert, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists , creates no new requirements. It highlights matters in four areas:

Auditing fair value measurements.

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Classification of fair value measurements within the fair value hierarchy established by Statement no. 157.

The use of specialists in fair value measurements.

The use of pricing services in fair value measurements.

The alert is available at www.pcaobus.org/Standards/Staff_Questions_and_Answers/ 2007/12-10_APA_2.pdf.