Auditing Accounting Estimates and Fair Values

Auditing Accounting Estimates and Fair Values - Auditing...

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Auditing Accounting Estimates and Fair Values
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Examples of Accounting Estimates and FV Estimates? Allowance for doubtful accts Inventory obsolescence Depreciation method Outcome of long-term contracts Litigation costs Pension Liabilities Complex Fin Instruments Share-based payments Assets/ Liab acquired in a business combination (goodwill, intangibles) Non-monetary transactions Accounting Estimates Fair Value Accounting Estimates
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What is Management Bias? Preference for a specific outcome or perspective (Bias article) Lack of neutrality in preparation and presentation of financial statements Inherent conservatism Remuneration incentives Tax minimization planning Lack of transparency in disclosure
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Challenges of Management Bias? Identify its existence (intentional vs unintentional) neither apparent or readily quantifiable at the assertion or account level Qualitative Characteristic of reliability Neutrality (freedom from bias) Prudence (or conservatism)
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Auditing Accounting Estimates and Fair Values - Auditing...

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