Auditing estimates and other soft accounting information:
Saved in:
| Main Author: | |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
New York, NY
Americ. Inst. of Certified Public Accountants
1998
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| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | 107 S. |
| ISBN: | 0870511998 |
Staff View
MARC
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Record in the Search Index
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| adam_text | Table of Contents
Chapter 1: Introduction 1
What Do We Mean by Soft Accounting Information?. 3
Tips for Auditing Soft Accounting Information 4
If I m New to the Client or Industry, How Do I Get Up to Speed? 6
Chapter 2: Planning for the Audit of Soft Accounting Information 9
Identify Soft Accounting Information Early in the Audit 9
Why It Pays to Get Involved Early 9
Focus on Areas of Risk 12
Determine What Your Client Has Done to Make and Support the Estimate 14
What If My Client Hasn t Done Anything? 14
Helping Your Client Make and Support Accounting Estimates 17
Educate Your Client on the Need for the Estimate 17
Help Your Client Develop a Model for the Estimate 19
Help Your Client Identify the Key Assumptions 21
Help Your Client Gather Information 22
Have Your Client Make the Assumptions 25
Help Your Client Calculate the Estimate 26
Other Things to Consider During the Planning Process 28
Chapter 3: Gathering and Assessing Audit Evidence 31
Audit Support for Soft Accounting Information. 31
How Do I Get Comfortable With Soft Accounting Information? 31
Qualities of a Reliable Process. 32
Qualities of the Underlying Assumptions 34
Evaluating the Support for Management s Assumptions 35
Gathering Audit Evidence 36
Three Techniques for Gathering Audit Evidence 36
How to Gather Audit Evidence for Certain Types of Soft
Accounting Information 40
Management s Ability and Intent 41
Estimates of Future Cash Flows 51
Fair Value Estimates 60
Assessing the Evidence in Support of Soft Information 66
How Do I Know I ve Gathered Enough Evidence? 66
Are Differences Between an Auditor s Estimate and the
Client s Estimate an Audit Difference? 66
Chapter 4: Financial Statement Presentation and Disclosure 69
The Importance of Financial Statement Disclosures 69
Disclosures About Soft Accounting Information 1
SOP 94-6, Disclosure of Certain Significant Risks and Uncertainties 71
Other Disclosures . 74
Optional Disclosures 74
Appendix A: Examples 83
Example 1: Acme Software (Allowance for Sales Returns) 84
Example 2: The Bond Company (Deferred Compensation Arrangement) 89
Example 3: Desert Drywall (Estimate of Expected Cash Flows) 95
Example 4: Outdoor Leisure (Warranty Liability) 100
Appendix B: Sources of Information 105
How to Conduct Business Research 105
General Reference Sources 105
Industry Information 105
Discount and Other Rates 107
Fair Value of Financial Instruments 107
1
Index to Key Questions
This guide was written in response to questions from practitioners about
auditing soft accounting information. Following are some questions and the
page number in this guide where suggested answers are provided.
Planning for the Audit of Soft Accounting Information
What areas involving soft accounting information am I most likely to
encounter on a small business audit?. 3
I have a new client in an industry that I don t have a lot of experience
in. How do I quickly learn about issues relating to estimates and soft
accounting information? 6
Soft Information and Audit Risk Assessments
If an account or an assertion involves an estimate or soft accounting
information, is it automatically a high-risk area?. 12
What are some red flags that should alert me to a higher risk of
material misstatement relating to soft accounting information? 13
My client has no process for making critical accounting estimates
(for example, an allowance for doubtful accounts) and instead leaves it
up to the auditors. Does this make the client unauditable? If I make these
estimates for my client, do I impair my independence} 14
Soft Information and Client Relations
My client doesn t understand or agree with the need to make an estimate
that has a negative impact on the bottom line. How can I convince him that
generally accepted accounting principles requires an estimate to be made? 17
Audit Techniques
As a practical matter, most auditors of small businesses are heavily involved
in helping their clients make significant estimates. What is an efficient and
effective process for doing this?. 17
Is it acceptable to delay the issuance of the financial statements until
significant uncertainties relating to an accounting estimate are resolved? 37
Is it acceptable for the client to estimate a range of possible outcomes? 38
Most of the evidence relating to accounting estimates and soft information
comes from inquiries of management. These inquiries usually are made by
inexperienced staff people, who don t go far enough or don t ask the right
questions. Do you have any suggestions for how I might instruct the staff to
conduct these inquiries?. 44 ;
I am auditing an estimate of future cashflows. Which assumptions should
I pay the most attention to? 51
What are the best sources available for obtaining estimates of fair value for
securities where an active market does not exist?. 61
Assessing Audit Evidence
Accounting estimates are easier to make and more reliable if they are
based on high-quality information. Where can I go to get such information? 22
The audit evidence relating to accounting estimates and soft information
is difficult to verify— usually, there are no invoices, canceled checks,
executed contracts, or other types of documentation we re used to seeing.
In general, what types of audit evidence should I look for to support an
accounting estimate? 31
In many cases, the most significant assumption underlying an estimate is
management s future plans. As an auditor, how am I supposed to see into
the future and get comfortable with management s intentions?. 41
If the client signs the rep letter stating their intentions, is that sufficient
competent evidential matter? 42
If the client has no written plans or other documentation to support
their future intentions, does that mean that support for those intentions
does not exist? 47
How can I assess the reasonableness of a discount rate used to estimate
fair value?. 64
How much evidence is enough to support an accounting estimate? 66
Disclosures for Estimates and Soft Accounting Information
What disclosures are required for soft accounting information? 71
Are there other disclosures I should consider making for soft accounting
information? Do you have any examples? 74
|
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| id | DE-604.BV026412922 |
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| indexdate | 2024-07-09T23:11:27Z |
| institution | BVB |
| isbn | 0870511998 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-021987010 |
| oclc_num | 918347393 |
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| physical | 107 S. |
| publishDate | 1998 |
| publishDateSearch | 1998 |
| publishDateSort | 1998 |
| publisher | Americ. Inst. of Certified Public Accountants |
| record_format | marc |
| spelling | Ramos, Michael J. Verfasser aut Auditing estimates and other soft accounting information written by Michael J. Ramos New York, NY Americ. Inst. of Certified Public Accountants 1998 107 S. txt rdacontent n rdamedia nc rdacarrier Rechnungswesen (DE-588)4048732-5 gnd rswk-swf Schätzwert (DE-588)4179332-8 gnd rswk-swf Revision Wirtschaft (DE-588)4049674-0 gnd rswk-swf USA (DE-588)4078704-7 gnd rswk-swf USA (DE-588)4078704-7 g Rechnungswesen (DE-588)4048732-5 s Schätzwert (DE-588)4179332-8 s Revision Wirtschaft (DE-588)4049674-0 s DE-188 HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=021987010&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Ramos, Michael J. Auditing estimates and other soft accounting information Rechnungswesen (DE-588)4048732-5 gnd Schätzwert (DE-588)4179332-8 gnd Revision Wirtschaft (DE-588)4049674-0 gnd |
| subject_GND | (DE-588)4048732-5 (DE-588)4179332-8 (DE-588)4049674-0 (DE-588)4078704-7 |
| title | Auditing estimates and other soft accounting information |
| title_auth | Auditing estimates and other soft accounting information |
| title_exact_search | Auditing estimates and other soft accounting information |
| title_full | Auditing estimates and other soft accounting information written by Michael J. Ramos |
| title_fullStr | Auditing estimates and other soft accounting information written by Michael J. Ramos |
| title_full_unstemmed | Auditing estimates and other soft accounting information written by Michael J. Ramos |
| title_short | Auditing estimates and other soft accounting information |
| title_sort | auditing estimates and other soft accounting information |
| topic | Rechnungswesen (DE-588)4048732-5 gnd Schätzwert (DE-588)4179332-8 gnd Revision Wirtschaft (DE-588)4049674-0 gnd |
| topic_facet | Rechnungswesen Schätzwert Revision Wirtschaft USA |
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