International Audit Board Focuses on Fair Value

The International Auditing and Assurance Standards Board has released an audit practice alert to help auditors deal with the controversial issue of fair value accounting estimates.

The IAASB's Task Force on Fair Value Auditing Guidance helped develop the alert, which highlights areas within the International Standards on Auditing that are relevant in auditing fair value accounting estimates in times of market uncertainty.

"Recent events in some of the world's largest financial markets continue to call attention to the difficulties in establishing fair values," said IAASB executive director of professional standards James Sylph in a statement.

The alert directs auditors to the recently revised ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, which was influenced by the changes in the credit markets during 2007.

While not effective until audits of financial periods commencing on or after Dec. 15, 2009, it includes guidance that is likely to be useful to auditors planning their 2008 engagements.