ACCA AAA · Chapter 16
Experts
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Using and evaluating the work of experts
Use the work critically competence, assumptions, data, consistency
Expertise outside accounting/auditing
- An individual or organisation with specialist knowledge
- Examples: actuary, valuer, lawyer or geologist
Management’s expert: ISA 500
- Management uses work to prepare financial statements
- Auditor evaluates it as potential audit evidence
Auditor’s expert: ISA 620
- Auditor uses work to obtain audit evidence
- Not needed automatically when management uses an expert
Responsibility
- Auditor remains solely responsible for the opinion
Competence and capabilities
- Qualifications, experience, membership and reputation
- Relevant field knowledge and ability to perform the work
Objectivity
- Consider financial interests and relationships
- Employment by entity does not automatically rule out use
Understand the work
- Purpose, scope, methods and responsibilities
- Decide whether work addresses the relevant assertion
Management’s expert
- Contractual relationship may still permit use as evidence
For an auditor’s expert, agree
- Nature, scope and objectives
- Roles, responsibilities and communications
- Confidentiality requirements
For management’s expert
- Understand work already performed and its purpose
Evaluate either expert’s output
- Reasonableness and consistency with other evidence
- Significant assumptions and methods
- Relevance, completeness and accuracy of source data
- Changes that may make the work outdated
Challenge inconsistency
- Property valuation assumes planning permission
- Refusal before reporting date contradicts the assumption
- Investigate before relying on the valuation
Test data and assumptions
- Compare actuarial return with market expectations
- Reconcile employee data to payroll/personnel records
- Consider damage after an earlier property valuation
If work is inadequate
- Auditor’s expert: agree further work or do more procedures
- Management’s expert: perform further procedures
- Consider appointing auditor’s expert where necessary
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