Implementing SAS 143 - Re-evaluate & Improve Auditing Estimates

Statement on Auditing Standards (SAS) 143, Auditing Accounting Estimates and Related Disclosures, codified in AU-C 540 of the same title, replaces the existing guidance on auditing accounting estimates in AU-C 540. SAS 143 does not so much create new requirements for auditing estimates but rather improves, expands, strengthens, and modernizes the requirements and application material. SAS 143 delivers a much-enriched body of professional literature on auditing estimates that should enable auditors to better understand and successfully carry out their responsibilities. Auditors who currently take a vigorous and effective approach to auditing estimates may find they already are implementing the guidance in SAS 143. Others may need to dig deeply into SAS 143 and improve their approach to auditing estimates, ensuring they are complying with the guidance. In any case, we believe that all auditors should read SAS 143 and use its implementation as an opportunity to re-examine, correct as necessary, refresh and elevate their approach to auditing estimates. SAS 143 is effective for audits of financial statements for periods ending on or after December 15, 2023.