Changes in estimates are accounted for prospectively, not retrospectively like error corrections. The auditor evaluates estimation uncertainty, the assumptions used and possible management bias.
Source: TMS 8, BDS 540
Related terms
Provisions (TAS 37)Liabilities of uncertain timing or amount; recognised when there is a present obligation arising from a past event, an outflow of resources is probable and a reliable estimate can be made.Expected credit lossCredit losses on financial assets that are estimated, taking forward-looking information into account, and provided for in advance.Prior period errorsOmissions from and misstatements in prior period financial statements arising from a failure to use, or misuse of, reliable information.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.Allowance for doubtful receivablesAn allowance made for receivables whose collection has become doubtful, recognising the expected loss as an expense.
Last updated: October 31, 2026 · This definition is for general information only.