Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p25
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 25/63)
Character Range: 84359–87636

be described using terms such as "Key Sources of Estimation Uncertainty" or "Critical Accounting Estimates". They may relate to accounting estimates that require management's most difficult, subjective or complex judgements. Such judgements may be more subjective and complex, and accordingly the potential for a consequential material adjustment to the carrying amounts of assets and liabilities may increase, with the number of items of data and assumptions affecting the possible future resolution of the estimation uncertainty. Information that may be disclosed includes:

                   + The nature of the assumption or other source of estimation uncertainty;

                   + The sensitivity of carrying amounts to the methods and assumptions used, including the reasons for the sensitivity;

                   + The expected resolution of an uncertainty and the range of reasonably possible outcomes in respect of the carrying amounts of the assets and liabilities affected; and

                   + An explanation of changes made to past assumptions concerning those assets and liabilities, if the uncertainty remains unresolved.

           * The disclosure of the range of possible outcomes, and the assumptions used in determining the range.

           * The disclosure of specific information, such as:

                   + Information regarding the significance of fair value accounting estimates to the entity's financial position and performance; and

                   + Disclosures regarding market inactivity or illiquidity.

           * Qualitative disclosures such as the exposures to risk and how they arise, the entity's objectives, policies and procedures for managing the risk and the methods used to measure the risk and any changes from the previous period of these qualitative concepts.

           * Quantitative disclosures such as the extent to which the entity is exposed to risk, based on information provided internally to the entity's key management personnel, including credit risk, liquidity risk and market risk.

Identified controls over management's process for making accounting estimates (Ref: Para 13(i))

A50.         The auditor's judgement in identifying controls in the controls activities component, and therefore the need to evaluate the design of those controls and determine whether they have been implemented, relates to management's process described in paragraph 13(h)(ii). The auditor may not identify controls in relation to all aspects of paragraph 13(h)(ii).

A51.         As part of identifying the controls, and evaluating their design and determining whether they have been implemented, the auditor may consider:

           * How management determines the appropriateness of the data used to develop the accounting estimates, including when management uses an external information source or data from outside the general and subsidiary ledgers.

           * The review and approval of accounting estimates, including the assumptions or data used in their development, by appropriate levels of management and, where appropriate, those charged with governance.

           * The segregation of duties between those responsible for making the accounting estimates and those committing the entity to the