Dubious Data? New Guidance Aims to Improve Auditing of Estimates

Auditors have new guidance to to help them with a basic problem: figuring out which data sources are relevant and reliable.

The Public Company Accounting Oversight Board issued four guidance documents Aug. 22 to help auditors apply new standards for accounting estimates and the supervision of specialists, who often produce those numbers.

Complex and subjective estimates are the most difficult areas to audit and are a common source of violations in PCAOB inspections. The new rules give auditors more flexibility to spend more time and testing on estimates that have a higher risk of material misstatement.

The staff guidance overlays ...