Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p48
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 48/63)
Character Range: 150062–153286

sufficient appropriate audit evidence about whether, in the context of the applicable financial reporting framework, the disclosures in the financial report that describe the estimation uncertainty are reasonable. In such cases professional judgement is also important in considering information about the methods, assumptions or data applied.

           * When information obtained from an external information source has been developed by that source using its own model(s). Paragraph A33F of ASA 500 provides relevant guidance.

A128.      For fair value accounting estimates, additional considerations of the relevance and reliability of information obtained from external information sources may include:

(a)                Whether fair values are based on trades of the same instrument or active market quotations;

(b)                When the fair values are based on transactions of comparable assets or liabilities, how those transactions are identified and considered comparable;

(c)                When there are no transactions either for the asset or liability or comparable assets or liabilities, how the information was developed including whether the inputs developed and used represent the assumptions that market participants would use when pricing the asset or liability, if applicable; and

(d)                When the fair value measurement is based on a broker quote, whether the broker quote:

(i)                 Is from a market maker who transacts in the same type of financial instrument;

(ii)               Is binding or nonbinding, with more weight placed on quotes based on binding offers; and

(iii)             Reflects market conditions as of the date of the financial report, when required by the applicable financial reporting framework.

A129.      When information from an external information source is used as audit evidence, a relevant consideration for the auditor may be whether information can be obtained, or whether the information is sufficiently detailed, to understand the methods, assumptions and other data used by the external information source. This may be limited in some respects and consequently influence the auditor's consideration of the nature, timing and extent of procedures to perform. For example, pricing services often provide information about their methods and assumptions by asset class rather than individual securities. Brokers often provide only limited information about their inputs and assumptions when providing broker indicative quotes for individual securities. Paragraph A33Ga of ASA 500 provides guidance with respect to restrictions placed by the external information source on the provision of supporting information.

Management's Expert

A130.      Assumptions relating to accounting estimates that are made or identified by a management's expert become management's assumptions when used by management in making an accounting estimate. Accordingly, the auditor applies the relevant requirements in this Auditing Standard to those assumptions.

A131.      If the work of a management's expert involves the use of methods or sources of data relating to accounting estimates, or developing or providing findings or conclusions relating to