Accounting estimates and disclosures addressed in new auditing standard

By Ken Tysiac

In a new standard issued Friday, the AICPA Auditing Standards Board provides requirements and guidance to auditors for auditing accounting estimates, which often is one of the most challenging areas a practitioner faces during an engagement.

Statement on Auditing Standards (SAS) No. 143, Auditing Accounting Estimates and Related Disclosures, is designed to:

  • Enable auditors to appropriately address the increasingly complex scenarios that arise from new accounting standards that include estimates and related disclosures.
  • Enhance auditors' focus on factors driving estimation uncertainty and potential management bias.

"This new auditing standard provides more robust guidance for auditors who are addressing an increasingly complex financial reporting environment," AICPA Chief Auditor Bob Dohrer, CPA, CGMA, said in a news release. "In our current period of economic uncertainty and volatility, management's asset impairment estimates are particularly important, and this standard will aid auditors in assessing them."

SAS No. 143 takes effect for audits of financial statements for periods ending on or after Dec. 15, 2023.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA's editorial director.

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