Abstract: AC-3 is a high quality audio compression format widely used in feature films and, more recently, on Digital Versatile Disks (DVD). For consumer applications the algorithm is usually coded into the firmware of a DSP Processor, which due to cost considerations may be capable of only fixed point arithmetic. Commercial AC-3 Encoders have been successfully implemented on 20-bit and 24-bit word-length processors. However, it is generally assumed that 16-bit processing is incapable of delivering the high fidelity audio, expected from the AC-3 technology. Double precision computation can be utilised on such processors to provide the high quality; but the computational burden of such implementation will be beyond the capacity of the processor to enable real-time operation.