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Auditing Accounting Estimates And Fair Value Measurements. A Literature Review

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  • Ioana CIURDAÅž

Abstract

The audit of accounting estimates, fair value measurements, and the associated risks, is a challenging subject, as already pointed out by regulatory bodies and researchers. However, the timeliness and the "never ending debate" of this topic are proved also by the directions for future research mentioned by the authors in the discussion sections from their papers. For this reason (the relevance of the subject) the goal of this paper is to realize a qualitative and quantitative analysis related to the audit of accounting estimates. We will see that the authors debate important issues related to audit risks, and present important findings, but it turns out that research work is never enough, a kind of Pandora's box opens. The paper provides an image about the current stage of the research, the results obtained so far, and new directions of research related to our topic, the main audit risks identified so far, related to the estimates. Our interest is focused on the proposals of the academics to handle these risks and the extent to which regulators managed to implement solutions to reduce these risks

Suggested Citation

  • Ioana CIURDAÅž, 2024. "Auditing Accounting Estimates And Fair Value Measurements. A Literature Review," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(26), pages 1-3.
    • Handle: RePEc:alu:journl:v:1:y:2024:i:26:p:3
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    References listed on IDEAS

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    1. Eilifsen, Aasmund & Hamilton, Erin L. & Messier, William F., 2021. "The importance of quantifying uncertainty: Examining the effects of quantitative sensitivity analysis and audit materiality disclosures on investors’ judgments and decisions," Accounting, Organizations and Society, Elsevier, vol. 90(C).
    2. Emily E. Griffith & Jacqueline S. Hammersley & Kathryn Kadous & Donald Young, 2015. "Auditor Mindsets and Audits of Complex Estimates," Journal of Accounting Research, Wiley Blackwell, vol. 53(1), pages 49-77, March.
    3. Emily E. Griffith & Jacqueline S. Hammersley & Kathryn Kadous, 2015. "Audits of Complex Estimates as Verification of Management Numbers: How Institutional Pressures Shape Practice," Contemporary Accounting Research, John Wiley & Sons, vol. 32(3), pages 833-863, September.
    4. Sarah B. Stuber & Chris E. Hogan, 2021. "Do PCAOB Inspections Improve the Accuracy of Accounting Estimates?," Journal of Accounting Research, Wiley Blackwell, vol. 59(1), pages 331-370, March.
    5. Jeremy B. Griffin, 2014. "The Effects of Uncertainty and Disclosure on Auditors' Fair Value Materiality Decisions," Journal of Accounting Research, Wiley Blackwell, vol. 52(5), pages 1165-1193, December.
    6. George Loewenstein & Daylian M. Cain & Sunita Sah, 2011. "The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest," American Economic Review, American Economic Association, vol. 101(3), pages 423-428, May.
    7. Rowe, Stephen P., 2019. "Auditors’ comfort with uncertain estimates: More evidence is not always better," Accounting, Organizations and Society, Elsevier, vol. 76(C), pages 1-11.
    8. Steven M. Glover & Mark H. Taylor & Yi‐Jing Wu & Ken T. Trotman, 2019. "Mind the Gap: Why Do Experts Have Differences of Opinion Regarding the Sufficiency of Audit Evidence Supporting Complex Fair Value Measurements?†," Contemporary Accounting Research, John Wiley & Sons, vol. 36(3), pages 1417-1460, September.
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    Keywords

    estimates; fair value; risks;
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