In December 2018, after years of study and public input, the
Public Company Accounting Oversight Board (PCAOB) adopted
amendments and revisions to audit standards that apply when
auditing accounting estimates, including fair value
measurements.
A single updated standard (AS 2501 (Revised)), replaces three
existing audit standards (AS 2501, replaced and retitled; AS 2502
and 2503 rescinded). The new standard establishes a uniform
risk-based approach and emphasizes that auditors need to apply
professional skepticism, including addressing potential management
bias, when auditing accounting estimates. Additionally, the new
standard provides more specific direction on auditing the fair
value of financial instruments that are based on information from
third-party pricing sources.
