Endurskoðunarþáttur

Endurskoðunarþáttur is an Icelandic term that translates to "review factor" or "audit factor" in English. It refers to a multiplier or adjustment used in financial accounting and auditing processes. This factor is applied to account balances or transactions to account for various aspects, such as estimations, potential risks, or differing accounting standards.

The purpose of an endurskoðunarþáttur is to ensure the accuracy and fairness of financial statements. Auditors may use these factors to adjust figures that are based on estimates, such as the valuation of inventory or the provision for bad debts. It can also be employed when comparing a company's financial data with industry benchmarks or regulatory requirements, where a specific factor might be needed to align the figures for a meaningful comparison.

In practice, the calculation and application of an endurskoðunarþáttur require professional judgment. Auditors must carefully consider the materiality of the adjustment and its potential impact on the overall financial picture. The factor is documented within the audit working papers to provide transparency and justification for the adjustments made. The use of an endurskoðunarþáttur is a critical tool in the auditor's arsenal for achieving reasonable assurance regarding the reliability of financial reporting.