the should be developed? Will this approach be should be developed. We believe this approach will be more effective in auditor’s range more effective than the approach of the as in estimate is reasonable or misstated. “narrowing range”, evaluating whether management’s point extant ISA 540, in Reference to these related application material paragraphs should be added to evaluating whether management’s point estimate is reasonable or misstated? paragraph 20. 6 Will the requirement in paragraph 23 and related application Yes, the requirement in paragraph 23 and related application material will material (see paragraphs A2-A3 and A142-A146) result in more assist in more consistent determination of a misstatement. consistent determination of a misstatement, including when the auditor uses an to evaluate auditor’s range management’s point estimate? 7 With respect to the proposed conforming and consequential Yes, they will support appropriate and consistent evaluations of the relevance amendments to ISA 500 regarding external information sources, and reliability of information from external information sources. with the revision to the requirement in paragraph 7 and the related new additional application material result in more appropriate and consistent evaluations of the relevance and reliability of information from external information sources? 8 Translations Recognizing that many respondents may N/A no comment on potential translation issues. – – intend to translate the final ISA for adoption in their own environments, the IAASB welcomes comment on potential translation issues respondents note in reviewing the ED-540. Effective Date Recognizing that ED-540 is a Yes, we think the effective date for the standard provides sufficient – substantive revision, and given the need for national due time to implement the standard. process and translation, as applicable, the IAASB believes that an appropriate effective date for the standard would be for financial reporting periods ending approximately 18 months after the approval of a final ISA. Earlier application would be permitted and encouraged. The IAASB welcomes comments on whether this would provide a sufficient period to support effective implementation of the ISA.
the auditor’s range should be developed? Will this approach be more effective than the approach of “narrowing the range”, as in extant ISA 540, in evaluating whether management’s point estimate is reasonable or misstated? should be developed. We believe this approach will be more effective in evaluating whether management’s point estimate is reasonable or misstated. Reference to these related application material paragraphs should be added to paragraph 20. 6 Will the requirement in paragraph 23 and related application material (see paragraphs A2-A3 and A142-A146) result in more consistent determination of a misstatement, including when the auditor uses an auditor’s range to evaluate management’s point estimate? Yes, the requirement in paragraph 23 and related application material will assist in more consistent determination of a misstatement. 7 With respect to the proposed conforming and consequential amendments to ISA 500 regarding external information sources, with the revision to the requirement in paragraph 7 and the related new additional application material result in more appropriate and consistent evaluations of the relevance and reliability of information from external information sources? Yes, they will support appropriate and consistent evaluations of the relevance and reliability of information from external information sources. 8 Translations – Recognizing that many respondents may intend to translate the final ISA for adoption in their own environments, the IAASB welcomes comment on potential translation issues respondents note in reviewing the ED-540. Effective Date – Recognizing that ED-540 is a substantive revision, and given the need for national due process and translation, as applicable, the IAASB believes that an appropriate effective date for the standard would be for financial reporting periods ending approximately 18 months after the approval of a final ISA. Earlier application would be permitted and encouraged. The IAASB welcomes comments on whether this would provide a sufficient period to support effective implementation of the ISA. N/A – no comment on potential translation issues. Yes, we think the effective date for the standard provides sufficient time to implement the standard.
IAASBED-AuditingAccountingEstimates-Response.docx