Auditing Accounting Estimates, Including Fair Value Measurements

(Updated August 22, 2019)


What Was Changed?

The new standard replaces three existing standards by establishing a single standard that sets forth a uniform, risk-based approach. It emphasizes that auditors need to apply professional skepticism, including addressing potential management bias, when auditing accounting estimates.

The new standard also provides more direction on addressing certain aspects unique to auditing fair values of financial instruments, including the use of pricing information from third parties such as pricing services and brokers or dealers.

Auditing Accounting Estimates (AS 2501) will be updated and retitled Auditing Accounting Estimates, Including Fair Value Measurements (AS 2501). Two other standards, Auditing Fair Value Measurements and Disclosures (AS 2502) and Auditing Derivative Instruments, Hedging Activities, and Investments in Securities (AS 2503), will be superseded.

Additional information on the new auditing standard: 

Why Did the PCAOB Adopt This Standard?

The use of complex accounting estimates and fair value measurements continues to grow in financial reporting. As a result, the use of the work of specialists continues to increase in both frequency and significance. Estimates often have a significant impact on a company's reported financial position and results of operations.

Accounting estimates are often some of the areas of greatest risk in an audit, requiring additional audit attention and appropriate application of professional skepticism.

The Board's oversight activities have revealed a recurring pattern of deficiencies in this area. Over the years, PCAOB staff has provided guidance for auditors related to auditing accounting estimates, but this area remains challenging and practices among firms vary.


What Are the Effective Dates?

The new standard and related amendments are effective for audits of fiscal years ending on or after December 15, 2020.

Resources and Tools for Implementation

Staff Guidance

The PCAOB staff provides guidance that 
highlights aspects of the new standard and enhancements made to integrate the Board’s risk assessment requirements when auditing accounting estimates, including fair value measurements.


The PCAOB announced a webinar on the implementation of auditing accounting estimates that will run from 1:00-2:15 pm ET on April 21. It will provide an overview of the rulemaking on auditing estimates and highlight aspects of the new requirements.

How Do I Contact the PCAOB?

Phone: (202) 591-4395   
Form: Contact Us