Scope of application
- This Auditing Standard specifies and guides the auditor's responsibility and auditing firms (hereinafter referred to as "auditors") Related to accounting estimates, including fair value accounting estimates and related disclosures during the audit of financial statements. In particular, this Standard expands the application of Vietnamese Auditing Standards No. 315, No. 330 and other Vietnamese Standards on Auditing with respect to accounting estimates. This Standard also specifies and provides guidance on errors in individual accounting estimates, and the indication of management bias.
The nature of accounting estimates
- Some financial statement items cannot be precisely measured, but can only be estimated. For the purposes of this Standard, the items on the financial statements are referred to as accounting estimates. The content and reliability of information that may be available to assist management in making accounting estimates may vary considerably, affecting the degree of uncertainty in accounting estimates. Such uncertainty affects the risk of material misstatement of the accounting estimates, including whether the accounting estimate is susceptible to management's intentional or unintentional bias (see described in paragraphs A1 - A11).
- The measurement objectives of the accounting estimates may vary depending on the applicable financial reporting framework and depending on the item presented in the financial statements. The measurement objective of some accounting estimates is to predict the outcome of one or more transactions, events, or conditions that will lead to the requirement for the accounting estimate. Other accounting estimates, including certain fair value accounting estimates, have different measurement objectives and are represented by the value of an existing transaction or financial statement item. are based on conditions prevailing at the time of measurement, such as the estimated market price of a particular asset or liability. For example, an applicable financial reporting framework may require that measurement of fair value be based on a presumptive present transaction between knowledgeable and willing parties. an arm's length transaction (sometimes referred to as "market participants" or its equivalent), rather than a transaction at a time in the past or in the future (reporting and presentation frameworks). Different finances may have different definitions of fair value).
- The difference between the actual result of an accounting estimate and the amount initially recognized or disclosed in the financial statements is not necessarily an error in the financial statements. This is especially true for fair value accounting estimates, since actual verifiable results are always influenced by the events or conditions that occurred after the date the accounting estimate was made. purpose of preparing and presenting financial statements.
- The auditor and the firm shall comply with this International Standard's requirements and instructions in performing the audit of accounting estimates related to the financial statements.
The entity (the customer) and the parties using the results of the audit shall have the necessary understanding of the requirements and instructions of this International Standard for the coordination of work and related relationships. with the auditor and the firm when reviewing accounting estimates during the audit process.
See full text Auditing Standard No. 540