Current Practices and Challenges in Auditing Fair Value Measurements and Complex Estimates: Implications for Auditing Standards and the Academy

Glover, S. M., M. H. Taylor, and Y. Wu. 2016. Current Practices and Challenges in Auditing Fair Value Measurements and Complex Estimates: Implications for Auditing Standards and the Academy. Auditing: A Journal of Practice & Theory, Forthcoming

Posted: 29 Oct 2014 Last revised: 26 May 2016

See all articles by Steven M. Glover

Steven M. Glover

Brigham Young University

Mark H. Taylor

University of South Florida, Muma College of Business, Lynn Pippenger School of Accountancy

Yi-Jing Wu

Texas Tech University - Rawls College of Business

Date Written: May 25, 2016

Abstract

Auditing fair value measurements and other complex estimates (hereafter FVMs) has received significant attention from regulators, practitioners and researchers. Using a survey, we gather data from audit partners with FVMs expertise to gain further insights in areas that have not been fully explored in the previous literature. Specifically, we extend the literature by providing a deeper understanding of the following areas: auditors’ use of different substantive approaches to test higher risk FVMs, auditors’ use of pricing services and valuation specialists, and how challenges differ when auditing financial vs. nonfinancial FVMs. In doing so, our findings and analyses extend prior research and coalesce pieces of several prior studies on auditing FVMs to provide a more complete picture of current auditing practices and challenges encountered by auditors. Our study provides insights useful in reconciling seemingly inconsistent findings in previous studies and provides important implications for future research, regulation and standards setting.

Keywords: Auditing fair value measurements and other complex estimates; pricing services; valuation specialists; financial fair value measurements; nonfinancial fair value measurements

Suggested Citation

Glover, Steven M. and Taylor, Mark H. and Wu, Yi-Jing, Current Practices and Challenges in Auditing Fair Value Measurements and Complex Estimates: Implications for Auditing Standards and the Academy (May 25, 2016). Glover, S. M., M. H. Taylor, and Y. Wu. 2016. Current Practices and Challenges in Auditing Fair Value Measurements and Complex Estimates: Implications for Auditing Standards and the Academy. Auditing: A Journal of Practice & Theory, Forthcoming , Available at SSRN: https://ssrn.com/abstract=2515807 or http://dx.doi.org/10.2139/ssrn.2515807

Steven M. Glover

Brigham Young University ( email )

Provo, UT 84602
United States
801-422-6080 (Phone)
801-422-0621 (Fax)

Mark H. Taylor

University of South Florida, Muma College of Business, Lynn Pippenger School of Accountancy ( email )

4202 E. Fowler Avenue
Tampa, FL 33620
United States
(813) 974-6516 (Phone)

Yi-Jing Wu (Contact Author)

Texas Tech University - Rawls College of Business ( email )

703 Flint Avenue
Lubbock, TX 79409
United States
216-368-8895 (Phone)

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