Audit Programme Estimates and Fair Values

GENERAL BACKGROUND AND KEY DEFINITIONS

ISA 540 Auditing Accounting Estimates, including Fair Value Accounting Estimates, and Related Disclosures sets forth the auditors considerations and responsibilities regarding the audit of accounting and fair value estimates and the related disclosures. The objective of the auditor is to obtain sufficient appropriate audit evidence about whether : accounting estimates, including fair value accounting estimates, in the financial statements, whether recognized or disclosed, are reasonable; and related disclosures in the financial statements are adequate, in the context of the applicable financial reporting framework. [ISA 540.06] Important Definitions: Accounting estimate An approximation of a monetary amount in the absence of a precise means of measurement. This term is used for an amount measured at fair value where there is estimation uncertainty, as well as for other amounts that require estimation. Where this ISA addresses only accounting estimates involving measurement at fair value, the term fair value accounting estimates is used. Auditors point estimate or auditors range The amount, or range of amounts, respectively, derived from audit evidence for use in evaluating managements point estimate. Estimation uncertainty The susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in its measurement. Management bias A lack of neutrality by management in the preparation of information. Managements point estimate The amount selected by management for recognition or disclosure in the financial statements as an accounting estimate. Outcome of an accounting estimate The actual monetary amount which results from the resolution of the underlying transaction(s), event(s) or condition(s) addressed by the accounting estimate. [ISA 540.07]

GENERAL INSTRUCTIONS
This audit programme provides various questions and considerations in accordance with the requirements of ISA 540. It is not intended to provide detailed guidance on the requirements of ISA 540, but rather to serve as a completeness checklist to ensure all the requirements of ISA 540 have been addressed. The audit programme is a supplement to the actual work performed on the audit engagement. The Engagement Partner should apply professional judgement in determining whether this programme should be used, including whether any modifications to the programme are necessary, taking into account the entitys policies and procedures . For further guidance, refer to the literature mentioned at the start of this document. In addition, also refer to the requirements of the relevant financial reporting framework for the engagement.

FLOW DIAGRAM FOR AUDITING ESTIMATES

Identification of Risks of Material Misstatement

Obtain an understanding of the financial reporting framework relevant to accounting estimates, / fair values including Design and Implementation of relevant controls. Classify risks as normal or significant. Design and implementation of a relevant control MUST be performed for all significant risks.

Develop a response to each risk of material misstatement. This may include operating effectiveness of relevant controls and/or substantive procedures. Responses to Risks Perform the required procedures to address significant risks as required by ISA 540. (Separate section in this checklist)

of Material Misstatement

Concluding and Reporting

Evaluate whether the accounting estimate / fair value is appropriate based on the audit evidence obtained. Consider whether we obtained sufficient and appropriate audit evidence to support our conclusions. Consider whether any indicators of bias or fraud exist in relation the estimates / fair values.