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The PCAOB published a staff audit practice alert on the audit of fair value measurements in financial statements. The alert provides auditors with additional information related to auditing fair value measurements and disclosures, as well as the use of specialists in this area.
"We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects on the markets and fair value measurements, and certain issues that might arise in the transition to Statement of Financial Accounting Standards No. 157, "Fair Value Measurements," said Marty Baumann, Director of the PCAOB Office of Research and Analysis.
The staff audit practice covers:
- Auditing fair value measurements;
- Classification of fair value measurements within the fair value hierarchy established by SFAS 157;
- The use of specialists in fair value measurements; and
The use of pricing services in fair value measurements.