This course examines the important role of accounting estimates in financial reporting and auditing. Participants will gain an understanding of how estimates are used across key areas of U.S. GAAP, their inherent risks, and how they can be abused. The course also explores the responsibilities of auditors and highlights some of the procedures for evaluating accounting estimates.

Chapter 1: Accounting Estimates in GAAP and Their Risks - Overview

This chapter provides an overview of the role of accounting estimates within U.S. GAAP. It addresses some of the key areas where estimates are required, such as fair value measurements, impairment assessments, and contingent liabilities, and emphasizes their significance in financial reporting. The chapter also explores the inherent risks and challenges of using estimates, including the potential for bias and abuse.

Chapter 2: Auditing Accounting Estimates - Overview

This chapter focuses on the auditor’s role in reviewing accounting estimates. It covers key audit procedures, including testing management’s methods and assumptions, evaluating data, and identifying risks. Challenges like incomplete information and complex models are addressed, with examples of effective audit strategies and communication practices.