Management’s point estimate
Management’s point estimate is the amount selected by management for recognition or disclosure as an accounting estimate in the financial statements. The auditor considers the methods, assumptions and data used, the estimation uncertainty and related disclosures, and may develop an auditor’s point estimate or range where appropriate.
Worked example
Management recognises a warranty provision of 80,000 based on expected claims; the auditor tests the claims data and assumptions supporting that amount.
Common mistake
Do not confuse management’s selected accounting amount with a statistical sample estimate or the auditor’s independently developed range.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |