Fair Value Measurements: Audit Consideration

Auditing fair value measurements can be daunting due to the high level of uncertainty involved. Valuations necessitate significant professional judgments and other subjective inputs. This requires substantial and robust evidence to support the auditor's assertion that the assumptions used are reasonable and that the fair value measurements are presented fairly.

Fair value measurements are increasingly being used in financial reporting across various industries. This is, however, a critical area that, if not approached correctly in accordance with the relevant financial reporting framework, may impede audit quality.