Auditing and Assurance Standards and Guidance

Auditing Standards (Ireland)

FRC ISAs (UK and Ireland) applicable for periods beginning on or after 15 December 2010 but before 17 June 2016

ISA (UK and Ireland) 540 Auditing, accounting estimates, including fair value accounting estimates, and related disclosures

Application and Other Explanatory Material

Further Substantive Procedures to Respond to Significant Risks (Ref: Para. 15 )

Development of a Range (Ref: Para. 16 )

In preparing the financial statements, management may be satisfied that it has adequately addressed the effects of estimation uncertainty on the accounting estimates that give rise to significant risks. In some circumstances, however, the auditor may view the efforts of management as inadequate. This may be the case, for example, where, in the auditor's judgment:

Sufficient appropriate audit evidence could not be obtained through the auditor's evaluation of how management has addressed the effects of estimation uncertainty.

It is necessary to explore further the degree of estimation uncertainty associated with an accounting estimate, for example, where the auditor is aware of wide variation in outcomes for similar accounting estimates in similar circumstances.

It is unlikely that other audit evidence can be obtained, for example, through the review of events occurring up to the date of the auditor's report.

Indicators of management bias in the making of accounting estimates may exist.

A112.

The auditor's considerations in determining a range for this purpose are described in paragraphs A87-A95.