Auditing Complex Management Estimates (CME4)

Overview

Accounting estimates are often among the most difficult and subjective amounts included in US GAAP financial statements. These estimates are pervasive and are often sensitive to relatively small changes in assumptions or circumstances, which can have a significant impact on the recorded – or not recorded – estimate in the financial statements. In this course, we will review the relevant auditing guidance related to auditing estimates, including the estimate for credit losses under ASC 326. We will also discuss the practical expedient and policy election options available to simplify estimating credit losses when applying ASC 326 following the release of ASU 2025-05.

We will focus on the three most common ways auditors can approach their audit of accounting estimates: waiting for the contingency to resolve itself, auditing the client’s estimation process, and developing the auditor’s point or estimation range. Then we’ll review what has changed since SASs 143–145 became effective.

Major Topics

Learning Objectives