Implementation Support for ISA 540 (Revised) Accounting Estimates

Jasper van den Hout, Christopher Arnold | July 25, 2019 |

In October 2018 the International Auditing and Assurance Standards Board (IAASB) released International Standard on Auditing (ISA) 540 (Revised), its revised standard on auditing accounting estimates and related disclosures. ISA 540 (Revised) becomes effective for financial statement audits for periods beginning on or after December 15, 2019.

In order to support implementation and help auditors navigate and apply the revised standard a series of video panel discussions have been developed by the IAASB and the International Federation of Accountants (IFAC). These focus on providing an overview of the standard, how firms are planning its implementation and sharing practical examples, tips and suggested good practices.

Implementation of ISA 540 (Revised), in this video the panelists discuss what the early lessons, challenges, benefits and successes are in the implementation of ISA 540 (Revised):

Scalability, in this video the panelists explain what has been done to bring out scalability in their methodology and the challenges encountered:

Risk assessment and inherent risk factors, in this video the panelists explain what has been done to implement the risk factors in their methodology and the challenges encountered:

Professional skepticism, in this video the panelists explain how their firms are planning to address the requirement to design and perform further audit procedures in a manner that is not biased towards obtaining audit evidence that may be corroborative or towards excluding audit evidence that may be contradictory and the requirement to “stand back” and evaluate audit evidence obtained:

The IAASB established an ISA 540 (Revised) Implementation Working Group and have developed a range of other implementation support, including:

  • ISA 540 (Revised) Presentation, The Chair of the ISA 540 (Revised) Implementation Working Group explains the public interest issues addressed in the revised standard, the main changes and the planned activities of the ISA 540 (Revised) Implementation Working Group.
  • ISA 540 (Revised) Slide Decks, Two slide decks that assist IAASB members, national standard setters, auditors, regulators and others to promote awareness of ISA 540 (Revised) within their respective jurisdictions. The summary slide deck provides a high level overview of ISA 540 (Revised), while the overview slide deck provides a more detailed overview of the changes.
  • At A Glance, a summary providing an overview of the changes to ISA 540 (Revised).
  • Flowchart 1: ISA 540 (Revised) – Requirements, this flow chart explains the flow of the requirements in ISA 540 (Revised).
  • Flowchart 2: ISA 540 (Revised) – Three Testing Approaches, this flow chart provides an overview of the requirements [paragraphs 18–29 of ISA 540 (Revised) relating to the three testing approaches, including the linkages between the testing approaches.
  • Diagram 1: Linkages between ISA 540 (Revised) and Other ISAs, this diagram shows the interrelationship of the requirements in ISA 540 (Revised) and other ISAs. This information will help auditors understand the key linkages and in applying all relevant requirements in relation to the audit of accounting estimates and disclosures.

During 2019, the ISA 540 Implementation Working Group will develop further implementation support materials which will be published on the IAASB’s website.


Jasper van den Hout

Director, International Auditing and Assurance Standards Board

Jasper joined the IAASB in 2013 and has been involved in a number of key projects, including the IAASB’s projects on accounting estimates (ISA 540 (Revised)), group audits (ISA 600 (Revised)) and key audit matters (ISA 701). Prior to joining the IAASB, Jasper worked for KPMG in the Netherlands and Canada. During his tenure at KPMG, Jasper worked on audits of mid-sized and large private companies in various industries. Jasper is both a Canadian (Ontario) and a Dutch qualified accountant. Follow Jasper on LinkedIn See more by Jasper van den Hout

Christopher Arnold


Christopher Arnold is a Director at the International Federation of Accountants (IFAC). He leads activities on contributing to and promoting the development, adoption and implementation of high-quality international standards, including the Member Compliance Program, Intellectual Property and Translations. Christopher is also responsible for IFAC’s SME (small- and medium-sized entities), SMP (small- and medium-sized practices) and research initiatives, which include developing thought leadership, public policy and advocacy. He was previously an Audit Manager for Deloitte and qualified as a professional accountant in a mid-tier accountancy practice in London (now called PKF-Littlejohn LLP). Christopher started his career as a Small Business Policy Adviser at the Association of Chartered Certified Accountants (ACCA).   See more by Christopher Arnold


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