Strengthen and enhance requirements for auditing estimates, including fair value measurements. This rulemaking is a companion to the rulemaking on the auditor's use of the work of specialists.



Most Recent Action

Adopted a new standard, AS 2501, Auditing Accounting Estimates, Including Fair Value Measurements, and related amendments.  The new standard replaces the Board's existing standards on auditing accounting estimates, fair value measurements, and derivative instruments. The rulemaking also amends other PCAOB standards to more specifically address certain aspects of auditing accounting estimates, focusing auditors on estimates with greater risk of material misstatement and emphasizing the application of professional skepticism, including addressing potential management bias. The new standard also includes a special topics appendix that addresses certain matters relevant to auditing the fair value of financial instruments, including the use of pricing information from third parties such as pricing services and brokers or dealers. The new standard and related amendments will take effect for audits of financial statements for fiscal years ending on or after December 15, 2020.



Accounting estimates are becoming more prevalent and significant as financial reporting frameworks evolve and require greater use of estimates, including those based on fair value measurements. They are some of the areas of greatest risk in the audit, requiring additional audit attention and appropriate application of professional skepticism. Auditing accounting estimates has proven challenging for auditors.



On December 20, 2018, the PCAOB adopted a new standard, AS 2501, Auditing Accounting Estimates, Including Fair Value Measurements, and related amendments. On July 1, 2019, the new standard and related amendments were approved by the SEC.

View the implementation page on accounting estimates  to see how PCAOB supports the implementation of the new standard.