ASB proposal addresses auditing of fair value estimates of financial instruments

By Ken Tysiac

The AICPA Auditing Standards Board (ASB) proposed a standard Wednesday that would provide practitioners with more guidance on auditing management’s estimates of the fair value of financial instruments, including on the use of pricing services.

Proposed Statement on Auditing Standards (SAS), Amendments to AU-C Sections 501, 540, and 620 Related to the Use of Specialists and the Use of Pricing Information Obtained From External Information Sources, would provide guidance:

  • On applying SAS No. 143, Auditing Accounting Estimates and Related Disclosures, when management has used the work of a specialist in making accounting estimates, as well as enhanced guidance for evaluating the work of management’s specialist;
  • On the use of pricing information from pricing services when evaluating management’s estimates related to the fair value of financial instruments; and
  • For using the work of an auditor’s specialist.

The proposal addresses comments received on the exposure draft that resulted in the issuance of SAS No. 143. The proposal would amend SAS No. 122, as amended; Sections 501 and 620; and SAS No. 143.

“As we completed our recent projects on audit evidence and estimates, we received feedback that more guidance on auditing the fair value of financial instruments would be helpful, with a particular focus on the use of pricing services,” ASB Chair Tracy Harding, CPA, said in a news release. “It’s also an appropriate time to modernize our standards related to management’s and auditor’s use of specialists, as this is becoming more common due to the continued complexity of today’s financial reporting.”

Comments on the proposal are due Feb. 4 and can be emailed to

Ken Tysiac ( is the JofA’s editorial director.


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