Chapter 12: ISA 620 - Using the work of an expert Flashcards
1
Q
Expert definition (3)
A
- Individual or Organisation
- that possesses:
> skills > knowledge > experience
in fields other than accounting/auditing
2
Q
Examples of areas where experts can be used
A
- Legal opinions
- Valuation of complex financial instruments, land and buildings, plant and machinery, jewellery, antiques etc.
- estimation of oil and gas reserves.
- interpretation of contracts, laws, and regulations
- analysis of complex or unusual tax compliance issues
3
Q
What should auditor do if work of expert is inadequate? (2)
A
Auditor is required to:
- agree additional work with expert
- perform other appropriate additional audit procedures.
4
Q
Reference abt expert in report (2)
A
Auditor should not refer in his report to the use of an expert unless required by law
If he does refer to expert he must make it clear that such reference does not reduce his responsibility for audit in any way
5
Q
Sources to Assess Competence + Capabilities + Objectivity of expert (5)
A
- Personal experience with his prev work
- discussions with expert
- discussions with other auditors familiar with his work
- knowledge his his qualifications, memberships of body/assoc./license to prac
- published papers/books by him
6
Q
How to Evaluate adequacy of the expert’s work (4)
A
- reasonableness of his conclusions
- consistency of those conclusions with other audit evidence
- reasonableness of significant assumptions and methods used
- relevance, completeness, accuracy of source data
7
Q
What to agree on the Terms of engagement with expert
A
- nature, scope, objectives of his work
- respective responsibilities of expert
- form of expert’s report
- confidentiality requirements
8
Q
Steps of work of expert (4)
A
- Assess Competence + Capabilities + Objectivity of expert
- Obtain understanding of expertise of expert
- Agree terms of engagement with expert
- Adequacy of expert’s work
