CAS 540 (Revised): Auditing Accounting Estimates and Related Disclosures
Requires a risk-based approach to auditing estimates, with explicit assessment of inherent risk factors (estimation uncertainty, complexity, subjectivity, management bias) and procedures responsive to those factors.
Why CAS 540 (Revised) matters
Expected credit losses (IFRS 9), impairment (IAS 36), share-based payments (IFRS 2), and fair-value measurements (IFRS 13) all sit here. Estimate audits are the highest-judgment work in any engagement and the most-inspected by CPAB.
Framework: Canadian Auditing Standards (CAS)
CAS are the auditing standards adopted by the Auditing and Assurance Standards Board (AASB) of CPA Canada. They are Canadian adoptions of the IAASB's International Standards on Auditing (ISAs) and govern every audit of financial statements performed in Canada.
Primary source: FRAS Canada
Frequently asked
What is CAS 540 (Revised)?
Requires a risk-based approach to auditing estimates, with explicit assessment of inherent risk factors (estimation uncertainty, complexity, subjectivity, management bias) and procedures responsive to those factors.
Why does CAS 540 (Revised) matter for an audit?
Expected credit losses (IFRS 9), impairment (IAS 36), share-based payments (IFRS 2), and fair-value measurements (IFRS 13) all sit here. Estimate audits are the highest-judgment work in any engagement and the most-inspected by CPAB.
Which framework does CAS 540 (Revised) belong to?
CAS 540 (Revised) falls under Canadian Auditing Standards (CAS). CAS are the auditing standards adopted by the Auditing and Assurance Standards Board (AASB) of CPA Canada. They are Canadian adoptions of the IAASB's International Standards on Auditing (ISAs) and govern every audit of financial statements performed in Canada.
Related standards — Canadian Auditing Standards (CAS)
- CAS 200 — Overall Objectives of the Independent Auditor
- CAS 210 — Agreeing the Terms of Audit Engagements
- CAS 220 — Quality Management for an Audit of Financial Statements
- CAS 230 — Audit Documentation
- CAS 240 — The Auditor's Responsibilities Relating to Fraud
- CAS 250 — Consideration of Laws and Regulations
See how Auditus checks CAS 540 (Revised)
Auditus.ai runs PCAOB, ISA, and CAS engagements end-to-end and cites the exact standard behind every finding — including CAS 540 (Revised).