Abstract
The purpose of this thesis is to explore the influence of accounting estimates when establishing sufficient and appropriate audit evidence. The thesis is divided into four main sections, each of which carry a pivotal contribution to the exploration of our research question. The first section covers the evaluation of accounting and accounting estimates from the conception of double- entry bookkeeping to the implementation of IFRS in EU. IFRS entailed the use of fair value as a fundamental principle. Fair value as the basic measurement principle resulted in an increase of accounting estimates for companies comparatively to before. The second section examines what an accounting estimate is and in which measurement attributes it will appear under the current standards. An accounting estimate is defined as monetary amounts in financial statements that are subject to measurement uncertainty. Furthermore, it is found that all the examined measurement attributes can affect an amount in the financial statement with measurement uncertainty. The degree of measurement uncertainty with which the measurement attributes affect values in the financial statements will be different: Cost prices will have a low degree of measurement uncertainty, whereas fair value measurements will have a higher degree of measurement uncertainty. The third section describes which methods and techniques ought to be used in connection with the collection of the audit evidence. The audit evidence has to be sufficient and appropriate in relation to the risk of material misstatement. When auditing accounting estimates, it is required that the auditor uses ISA 540 – Auditing accounting estimates and related disclosures and one of the three methods described in the standard to gather the required evidence. The auditor has an obligation to ensure that the disclosure requirements are meet and that they contribute to the presentation of a financial statement which gives a true and fair view. The fourth section studies the impact of accounting estimates with high degree of measurement uncertainty on the collection of audit evidence. The study shows the limitations in the use of the methods listed in ISA 540. When collecting the evidence, it will be impossible to obtain the appropriate and sufficient evidence through the use of Obtaining Audit Evidence from Events Occurring up to the Date of the Auditor’s Report and Developing an Auditor’s Point Estimate or Range. The auditor is therefore forced to use the method Testing How Management Made the Accounting Estimate. When using this method, the collection of evidence is gathered empirically through inquiries and inspections. The strength of the audit evidence is considered low. This means that disclosures related to the accounting estimate becomes particularly important in order to obtain the appropriate and sufficient audit evidence.
Uddannelser | Cand.merc.aud Regnskab og Revision, (Kandidatuddannelse) Afsluttende afhandling |
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Sprog | Dansk |
Udgivelsesdato | 2022 |
Antal sider | 174 |
Vejledere | Leif Christensen |