The provisions on auditing accounting estimates

Accounting estimate is an approximate value of an indicator related to the financial statements (FS) are estimated in actual cases have arisen, but no precise figures or not the calculation method rather, either a realistic target but not yet incurred were estimated to establish SFH.

Specific expression of the target estimated reserve has arisen is doubtful, diminution in value of long term investments, provision for impairment of inventory, depreciation of fixed assets (fixed assets), expenses prepaid expenses, the value of unfinished products, revenue recorded before, sales of uncompleted construction contracts and specific expression of the target estimated reserve is not incurred warranty costs, accrued expenses …


Under the provisions of Accounting Standard No. 29- VN Change in accounting policies, accounting estimates and errors, changes in accounting estimates are applied prospectively and is recognized in the Statement business performance of any changes if such changes affect the current period or the period of change and subsequent periods if the changes that affect us, unless if the change estimate accounting changes resulted in assets, liabilities or change an item in equity, the change in accounting estimates will be recognized by adjusting the carrying value of assets and liabilities or item of equity involved.

The use of accounting estimates with reasonable reliability is an indispensable part in the preparation of financial statements, and not because of the accounting estimates that are considered unreliable. Indeed, although the accounting estimates still have to have a basis for calculating and determining not possible to estimate an arbitrary manner, eg provision of these debts are an estimated for- accounting and corporate accounting must comply with the provisions of Circular No. 13/2006 / TT-BTC dated 02/27/2006 guiding the setting up of provisions including provision for debts doubtful receivables: 30% deduction for the value of overdue debts from 3 months to 1 year, 50% of the value of overdue debts from 1 year to less than 2 years, 70% of the value for debts to be recovered through the term from 2 years to less than 3 years. Or regulatory provision for financial investments as Figure 1.

When conducting accounting and auditors (auditors) to obtain sufficient appropriate evidence to accounting conclusions about the reasonableness of accounting estimates made in each specific case. The necessary information enough to convince the reasonableness of accounting estimates to be presented in the notes to the financial statements. Under the provisions of Auditing Standards No. 540- Audit VN accounting estimates, KTV must apply or apply a combination of the following methods in the process of accounting of accounting estimates:

First, review and test process of accounting estimates made by the unit:

+ Check the data and consideration of assumptions: KTV to evaluate the accuracy, completeness and appropriateness of the data used as the basis for making accounting estimates. When using accounting data for making accounting estimates, to check the consistency of the data with the data that has been reflected in the accounting books.

+ KTV to evaluate the data used as the basis unit of accounting estimates made, as well as assess the appropriateness of the assumptions that the unit was used to develop accounting estimates: when assessing the assumed as the basis of accounting estimates made, KTV must consider this a reasonable assumption considering the actual results of the previous accounting period or not? Consistent with the assumptions used to establish the accounting estimate or not? Consistent with the unit plan established or not? KTV to pay special attention to these assumptions are more volatile or misstatement. KTV also have to ensure the unit data used to establish the accounting estimates are still appropriate.

+ In case of considering the complex accounting estimates related to specialized techniques: KTV to use materials of technical experts.

+ Check the calculations related to the accounting estimates: KTV to test methods of calculation that the unit was used to develop accounting estimates related to the financial statements. Content, timing and extent of testing depends on the degree KTV complexity of the calculation of accounting estimates, the appreciation of the KTV on the procedures and methods that unit used to covenant properties and materiality of accounting estimates.

+ Comparison of accounting estimates made by the previous accounting periods with actual results of those periods when conducting accounting and auditors to compare accounting estimates made in prior accounting periods with results implementation of such accounting period to review the evidence collected about the reliability of the method of accounting estimates made by the unit; consider the need to adjust the estimation methods; calculate and evaluate the difference between the results of the accounting estimate in the period. In case of need for a correction or explanation in the notes to the financial statements.

+ Consider the approval procedures of accounting estimates made by the Director: The director or head of unit must review and approve the critical accounting estimates. KTV to consider the review and approval of the critical accounting estimates of the appropriate management level or not and it has shown in the document as the basis for the preparation of accounting estimates have not.

Second, KTV up an independent estimate for comparison with estimates of the unit.

KTV can be independent or collect an independent accounting estimates and compare the results independently estimated that the accounting estimates made by the unit. When using an independent estimate results, auditors must evaluate the data, consider the assumptions and test the calculation procedures used in the process of accounting estimates

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