
The Public Company Accounting Oversight Board (PCAOB) has released a new resource publication titled “Audit Focus: Auditing Accounting Estimates,” to assist smaller audit firms in tackling accounting estimates.
The guidance is designed to provide auditors, particularly those working with smaller public companies, with essential reminders and practices for handling accounting estimates, a challenging component of financial statements.
Accounting estimates, which include impairments of long-lived assets and allowances for credit losses, are prevalent in financial statements and can significantly impact a company’s financial position and operational results.
These estimates often involve subjective assumptions and measurement uncertainty, making them prone to management bias and complex processes, thus posing significant audit risks.
The PCAOB’s inspection staff has identified ongoing deficiencies in auditors’ testing of accounting estimates.
These include failures to identify significant assumptions used by companies in determining accounting estimates.

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By GlobalDataThe “Audit Focus” edition offers key reminders from PCAOB standards, insights into common deficiencies, and good practices from audit firms handling smaller companies.
Previous “Audit Focus” editions have addressed topics such as journal entries, audit committee communications, and critical audit matters.
Earlier in May 2025, the PCAOB released new staff presentation videos to assist firms in implementing four key areas of their quality control (QC) system under QC 1000, A Firm’s System of Quality Control.
These presentations are part of the PCAOB’s ongoing efforts to support firms in complying with board standards.
Led by the PCAOB’s office of the chief auditor, the videos cover roles and responsibilities, ethics and independence, people resources, and technological and intellectual resources, addressing specific requirements for designing, implementing, and operating QC systems.
Recently, the PCAOB established a formal protocol agreement with the Slovak Republic’s Auditing Oversight Authority.
The agreement seeks to strengthen collaboration in overseeing auditors and public accounting firms across both regions.