Auditing accounting estimates
Article Abstract:
Statement on Auditing Standards (SAS) 57 articulates the responsibilities of management and auditors in the formulation of accounting estimates, and is intended to reduce the bias in both accounting estimates and financial statements. According to SAS 57, management is responsible for: establishing and controlling a process for developing accounting estimates; gathering relevant data on which to base estimates; and determining the amount of the estimates and their proper disclosure in financial statements. An auditor is responsible for evaluating the reasonableness of estimates, which is a three step process of: determining if all material have been developed; evaluating the reasonableness of the estimates; and determining whether management has adhered to generally accepted accounting principles. The effects of SAS 57 will include: increased audit expense: increased conflict between managerial accountants and auditors and management; and increased scrutiny for managerial accounting.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1989
User Contributions:
Comment about this article or add new information about this topic:
Creating loopholes subverts objectives
Article Abstract:
Standards developed by the National Association of Accountants (NAA) in the 1980s address ethical standards for accountants. Two specific NAA ethical standards relate to performing professional duties in accordance with technical standards, and refraining from engaging in activities which could discredit the profession. Many accountants focus on trying to find loopholes in ethical standards instead of trying to understand the focus on standards. Unfortunately, such practices undermine the professionalism of accountants and should be changed.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1989
User Contributions:
Comment about this article or add new information about this topic: