PwC responds to PCAOB's proposal related to auditing accounting estimates

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Comment letter , PwC US Aug 30, 2017

We support PCAOB's proposal to update requirements for auditing accounting estimates, including fair value.


In June 2017, the PCAOB proposed amendments to its standards for auditing accounting estimates and fair value measurements, under which three standards would be replaced with a single standard that sets forth a uniform, risk-based approach. The proposed standard is intended to reinforce the need for professional skepticism and prompt auditors to devote attention to potential management bias. Enhanced auditor effort related to testing assumptions, data, and methods for all accounting estimates would also be required. The proposal sets out specific requirements for auditing the fair value of financial instruments, including evaluating information from third-party pricing services.

In our comment letter, we support the objective of the PCAOB's standard-setting proposal. In many areas, the proposal will better align standards with current practices, which may promote more consistency in practice and enhance audit quality. We set out suggestions to address what we see as potential practical challenges or areas for clarification, including in relation to valuation of investments based on investee financial condition or operating results and third-party pricing sources.

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Heather Horn

Heather Horn

US Strategic Thought Leader, National Professional Services Group, PwC US

David Schmid

David Schmid

International Accounting Leader, National Professional Services Group, PwC US

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