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Auditing Standard ASA 540 Auditing Accounting Estimates and Related Disclosures
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Definitions
- For the purposes of this Auditing Standard, the following terms have the meanings attributed below:
- Accounting estimate – A monetary amount for which the measurement, in accordance with the requirements of the applicable financial reporting framework, is subject to estimation uncertainty. (Ref: Para. A14)
- Auditor’s point estimate or auditor’s range – An amount, or range of amounts, respectively, developed by the auditor in evaluating management’s point estimate. (Ref: Para. A15)
- Estimation uncertainty – Susceptibility to an inherent lack of precision in measurement. (Ref: Para. A16, Appendix 1)
- Management bias – A lack of neutrality by management in the preparation of information. (Ref: Para. A17)
- Management’s point estimate – The amount selected by management for recognition or disclosure in the financial report as an accounting estimate.
- Outcome of an accounting estimate – The actual monetary amount that results from the resolution of the transaction(s), event(s) or condition(s) addressed by an accounting estimate. (Ref: Para. A18)