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This section provides guidance to auditors on obtaining and evaluating sufficient competent evidential matter to support significant accounting estimates in an audit of financial statements in accordance with generally accepted auditing standards. For purposes of this section, an accounting estimate is an approximation of a financial statement element, item, or account. Accounting estimates are often included in historical financial statements because—
- The measurement of some amounts or the valuation of some accounts is uncertain, pending the outcome of future events.
- Relevant data concerning events that have already occurred cannot be accumulated on a timely, cost-effective basis.