Appendix No. 6
to the Order of the Ministry of Finance of the Russian Federation of November 9, 2016 No. 207n
The International Standard of Audit (ISA) 540 "Audit of estimative values, including assessment of fair value, and the corresponding disclosure of information" it is necessary to consider together with MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit".
1. In this International Standard of Audit (ISA) the auditor's obligations on audit of estimative values, including estimates of fair value, and the corresponding disclosure of information in the financial reporting are established. In particular, in it the procedure for application of MCA 315 (reviewed) <1> and MSA 330 <2>, and also other MSA estimative values, applicable to audit, is in more detail explained. It also contains requirements and instructions for identification of misstatements of separate estimative values and signs of possible bias of management.
<1> MCA 315 (reviewed) "Identification and risks assessment of essential misstatement by means of studying of the organization and its environment".
<2> MCA 330 "Audit procedures in response to the estimated risks".
2. Some financial statement line items do not give in to exact assessment, only their rough estimate is possible. For the purposes of this standard such financial statement line items in the text hereinafter are referred to as further "estimative values". Nature and reliability of information which the management can use for reasons for estimative value significantly differ that influences degree of the uncertainty connected with estimative values. Degree of uncertainty of assessment, in turn, influences risks of essential misstatement of estimative values, including their sensitivity to unintentional or intentional bias of management (see the Items A1 - A 11).
3. The purposes of calculation of estimative values can vary depending on features of the applicable concept of preparation of the financial reporting and specific financial statement line item. One estimative values are calculated with the purpose to predict result (outcome) of one or several transactions, events or conditions in connection with which there is need for calculation of estimative value. The purpose of calculation of other estimative values, including set of estimates of fair value, other, namely cost determination of current transaction or the financial statement line item taking into account the conditions existing for date of assessment such as settlement market value of specific asset type or obligations. For example, the applicable concept of preparation of the financial reporting can provide assessment of fair value proceeding from conditional hypothetical current transaction which is made on market conditions between the informed concerned parties (in some cases for their designation the term "participants of the market" or other equivalent term is used), but not from calculations for transaction for certain last or future date <1>.
<1> In different concepts of preparation of the financial reporting different determinations of fair value can be accepted.
4. The difference between the actual result of estimative value and size which was acknowledged originally or disclosed in the financial reporting not necessarily represents misstatement of the financial reporting. In particular it belongs to estimates of fair value as inevitably exert the impact of event or condition arising after reporting date on which assessment for the purposes of financial reporting preparation is calculated on any observed result.
5. This standard becomes effective concerning financial records audit for the periods beginning on December 15, 2009 or after this date.
6. The purpose of the auditor consists in obtaining sufficient competent auditor evidences of that:
(a) estimative values, including the estimates of fair value recognized or opened in the financial reporting are proved;
(b) the corresponding disclosures of information in the financial reporting are sufficient in the context of the applicable concept of preparation of the financial reporting.
7. For the purposes of International standards of audit the following terms have the stated below values:
(a) estimative value - approximate value of cash size for lack of exact methods of its calculation. This term is used for designation of the size estimated at fair value in case of uncertainty of assessment and also for designation of other sizes requiring assessment. In cases when this standard concerns only estimative values implying assessment at fair value the term of "assessment of fair value" is used;
(b) auditor dot assessment or the range of estimates - the size or the range of sizes therefore which are calculated on the basis of auditor proofs for use during the analysis of dot assessment of management;
(c) uncertainty of assessment - influence on estimative value and the related disclosed information of insufficient accuracy of calculation;
(d) bias of management - absence at impartiality management (insufficient impartiality of management) in the course of preparation of information;
(e) dot assessment of management - the size chosen as management for recognition or disclosure in the financial reporting as estimative value;
(f) the actual result of estimative value - the actual cash size calculated by results of basic transactions, events or conditions which were considered when calculating estimative value.
8. In case of accomplishment of the provided MCA 315 (reviewed) of <1> assessment procedures of risks and actions accompanying them with the purpose to create idea of organization activity and its environment, including of internal control system of the organization, the auditor shall analyse the following for the purpose of receipt of understanding concerning identification and risks assessment of essential misstatement of estimative values (see Item A 12):
<1> MCA 315 (reviewed) Items 5 - 6 and 11 - 12.
(a) what requirements of the applicable concept of preparation of the financial reporting important for estimative values, including the corresponding disclosure of information (see the Items A13 - A 15);
(b) as the management determines transactions, events and conditions which can result in need of recognition for the financial reporting of estimative values or disclosure of information on them in the financial reporting. In the course of receipt of understanding the auditor shall ask management questions of changes in circumstances of activities which can cause need for calculation of the new estimative values or for review calculated earlier (see the Items A16 - A 21);
(c) as the management calculates estimative values and also on what data on data they are based, including (see the Items A22 - A 23):
(i) what method, including, when applicable, model, used when calculating estimative value (see the Items A24 - A 26);
(ii) what significant control facilities (see the Items A27 - A 28);
(iii) whether attracted the expert's management (see the Items A29 - A 30);
(iv) what assumptions on the basis of which estimative values (see the Items A31 - A 36) were calculated;
(v) whether occurred or whether there shall be change in comparison with previous period in the methods used for calculation of estimative values; if yes, that for what reason (see Item A 37);
(vi) whether influence of uncertainty of assessment estimated management; if yes, that how (see Item A 38).
9. The auditor shall analyse the actual result of estimative values reflected in the financial reporting of previous period, or, when applicable, their subsequent revaluation for the purposes of preparation of the financial reporting for current period. In case of determination of nature and amount of the analysis the auditor considers nature of estimative values and the importance of information obtained on analysis results for identification and risks assessment of essential misstatement of the estimative values included in the financial reporting of current period. At the same time the purpose of the analysis does not consist in calling in question the judgments prepared in the last periods and based on information which existed at that time (see the Items A39 - A 44).
10. In case of identification and risks assessment of essential misstatement according to requirements of MCA 315 (reviewed) <1> auditor shall establish degree of the uncertainty connected with estimative value (see the Items A45 - A 46).
<1> MCA 315 (reviewed) Item 25.
11. The auditor shall establish whether will bring, on its professional judgment, any of estimative values with high degree of uncertainty to emergence of significant risks (see the Items A47 - A 51).
12. Proceeding from the estimated risks of essential misstatement, the auditor shall establish (see Item A 52):
(a) whether observed management properly of the requirement of the applicable concept of preparation of the financial reporting regarding estimative values (see the Items A53 - A 56);
(b) whether methods of calculation of estimative values pertinent are and whether there was their application consecutive, and also whether changes are (in the presence of such) in estimative values or in method of their calculation in comparison with previous period proved in the circumstances (see the Items A57 - A 58).
13. The auditor, taking the answer-back measures concerning the estimated risks of essential misstatement according to requirements of MCA 330 <1>, shall execute one or several of the listed below actions taking into account nature of estimative value (see the Items A59 - A 61):
<1> MSA 330, Item 5.
(a) establish whether provide the events which happened before date of audit opinion, auditor proofs concerning estimative values (see the Items A62 - A 67);
(b) check how the management calculated estimative values and data on which they are based. At the same time the auditor shall estimate (see the Items A68 - A 70):
(i) whether the used evaluation method pertinent in the circumstances (see the Items A71 - A 76) is;
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