What are the factors to be considered by the auditor when determining the need to use work of an expert?
Let’s understand in detail about Standard on Auditing SA 620 Using the Work of an Auditor’s Expert : Show
I. Auditor’s Expert – “An individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the auditor to assist the auditor in obtaining sufficient appropriate audit evidence. An auditor’s expert may be the auditor’s internal expert or an external expert. II. Management Expert – “An individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the entity to assist the entity in preparing the financial statements. Nature, Timing, and Extent of Audit ProceduresTo determine the nature, timing, and extent of audit procedures related to expert’s work, the following matters are to be considered by the auditor: i. Nature of the subject ii. Risk of material misstatement iii. The significance of expert work to the audit iv. Auditor’s knowledge of and experience with the expert’s work v. If the expert is subject to the auditor’s firm quality control policies & procedures Some of the requirements related to auditor’s expert work
Reference to the Auditor’s Expert in the Auditor’s ReportReference to the auditor’s expert work should not be made in an auditor’s report containing an unmodified opinion unless required by law or regulation. If such reference is-
The auditor should indicate in the auditor’s report that the references do not reduce the auditor’s responsibility for the audit opinion Example of Auditor’s Expert work
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An individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the auditor to assist the auditor in obtaining sufficient appropriate audit evidence. An auditor’s expert may be either an auditor’s internal expert who is a partner or staff, including temporary staff, of the auditor’s firm or a network firm, or an auditor’s external expert. Scope of this ISA 620ISA 620 deals with the auditor’s responsibilities relating to the work of an individual or organization in a field of expertise other than accounting or auditing, when that work is used to assist the auditor in obtaining sufficient appropriate audit evidence. The Auditor’s Responsibility for the Audit OpinionThe auditor has sole responsibility for the audit opinion expressed, and that responsibility is not reduced by the auditor’s use of the work of an auditor’s expert. Nonetheless, if the auditor using the work of an auditor’s expert, having followed this ISA, concludes that the work of that expert is adequate for the auditor’s purposes, the auditor may accept that expert’s findings or conclusions in the expert’s field as appropriate audit evidence. Effective Date on or after 15 December 2009ObjectiveThe objectives of the auditor are:
DefinitionsFor definitions refer definitions section. RequirementsDetermining the Need for an Auditor’s ExpertIf expertise in a field other than accounting or auditing is necessary to obtain sufficient appropriate audit evidence, the auditor shall determine whether to use the work of an auditor’s expert. Nature, Timing and Extent of Audit ProceduresIn determining the nature, timing and extent of those procedures, the auditor shall consider matters including;
The Competence, Capabilities and Objectivity of the Auditor’s ExpertThe auditor shall evaluate whether the auditor’s expert has the necessary competence, capabilities and objectivity for the auditor’s purposes. In the case of an auditor’s external expert, the evaluation of objectivity shall include inquiry regarding interests and relationships that may create a threat to that expert’s objectivity. Obtaining an Understanding of the Field of Expertise of the Auditor’s ExpertThe auditor shall obtain a sufficient understanding of the field of expertise of the auditor’s expert to enable the auditor to;
Agreement with the Auditor’s ExpertThe auditor shall agree, in writing when appropriate, on the following matters with the auditor’s expert:
Evaluating the Adequacy of the Auditor’s Expert’s WorkThe auditor shall evaluate the adequacy of the auditor’s expert’s work for the auditor’s purposes, including:
If the auditor determines that the work of the auditor’s expert is not adequate for the auditor’s purposes, the auditor shall:
Reference to the Auditor’s Expert in the Auditor’s ReportThe auditor shall not refer to the work of an auditor’s expert in an auditor’s report containing an unmodified opinion unless required by law or regulation to do so. If such reference is required by law or regulation, the auditor shall indicate in the auditor’s report that the reference does not reduce the auditor’s responsibility for the auditor’s opinion. If the auditor makes reference to the work of an auditor’s expert in the auditor’s report because such reference is relevant to an understanding of a modification to the auditor’s opinion, the auditor shall indicate in the auditor’s report that such reference does not reduce the auditor’s responsibility for that opinion. |