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COPYRIGHT

© Commonwealth of Australia 2006. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Principal Executive, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of the Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.

ISSN 1833-4393

CONTENTS

PREFACE

AUTHORITY STATEMENT

Paragraphs

Application.................................. 1-2

Operative Date................................ 3

Introduction.................................. 4-7

The Nature of Accounting Estimates.................. 8-10

Audit Procedures Responsive to the Risk of Material Misstatement of the Entity’s Accounting Estimates 11-14

Review and Testing the Process Used by Management...... 15

Evaluation of Data and Consideration of Assumptions...... 16-22

Testing of Calculations.......................... 23

Comparison of Previous Accounting Estimates
with Actual Results............................ 24

Consideration of Management's Approval Procedures...... 25

Use of an Independent Estimate..................... 26

Review of Subsequent Events...................... 27

Evaluation of Results of Audit Procedures.............. 28-31

Management Representations...................... 32-34