APB offers new guidance on financial instruments

New audit rules have been released on the valuation of controversial financial instruments which played a central role in the financial crisis and have since added fire to debates surrounding fair value accounting.

The Auditing Practices Board (APB) said it is trying to inject some clarity into the audit of complex financial instruments which it describes as “a challenge”, made difficult by recent stagnant economic conditions.

Richard Fleck, chairman of the APB, said the new guidelines would make it easier to audit financial instruments when markets make valuations difficult to come to.

“The audit of some financial instruments can be challenging, especially when market conditions make fair values difficult to estimate,” he said

“The APB hopes that the updated (audit rules), which contains much new guidance, will assist auditors in addressing current considerations that are relevant in the audit of financial statements of entities that use complex financial instruments.”

Read the full APB statement: APB issues updated Interim Guidance on Auditing Complex Financial Instruments