ISA 620 - Using the Work of an Auditor 's Expert

Question 1

ISA 620: Using the Work of an Auditor’s Expert:

Answer 1

What is an Auditor’s Expert:
> A Person or Organization,
> Whose expertise in the field,
> Other than Accounting & Auditing,
> Whose work is used for the purpose of the Audit,
* For Obtaining Sufficient and Appropriate Audit Evidence, in assisting the Audit Work.

Exclusions (2):
> ISA 220 - Accounting & Audit Expert Member in team.
> ISA 500 - Management Expert.

FS are prepared by Management who also make use of Experts for:
> Complex transactions.
> Expertise calculations.

The Auditor can also higher an Auditor’s Expert in some special cases where certain skills are needed.

Objective:
> Auditor must Determine the need for Auditor Expertise Work.
> Evaluate the adequacy of the work.
> Whom are we going to higher, and what Qualifications must be possessed?
> Understand the field of the Expertise, what do we require and what does the Expert offer? The two must match.
> Enter into an agreement with Auditor’s Expert.
> Discuss about the adequacy of the work.

If there is need to make use of the Auditor’s Expert:
> Engage Expert for the area.
> Complex area.
> Particular Risk and major transaction area.
> Where Management uses Expert for that area.

• ISA 315 - Identifying and Assessing Risk of Material Misstatements.
• ISA 315 - Entity Internal Control & It’s environment.
• ISA 330 - Overall Risks of Material Misstatements
• ISA 330 - Overall responses for assessed risks.
  Once you perform the procedures:
• ISA 500 - Sufficient and Appropriate Audit Evidence.

Summary of Qualities required in an Auditor’s Expert:
> Competence for the field,
> Capabilities,
> Objectivity.

How do you get to know about the above?
> Enquire from him,
Enquire from management,
> Consultation with other Auditor,
> Publishing in Articles.

Having enquired, do the following:
> Check his expertise in the field,
> Is it adequate for our Audit?
> If happy with everything, then organize an Agreement for performing the work.
* It’s important that you do a written Agreement.
* It is more like an engagement letter.
> Agree and write about the Roles & Responsibilities.
> Nature, Objective and Scope,
> Confidentiality.
> Complex, sometimes greater content.
> Sometimes it will be first time hiring, new relationship with the Expert.
* Because of the above, it’s important to put everything in writing.

Shall discuss about the following with the Expert:
Findings and Conclusions,
> Assumptions used, are they reliable?
> What is the source of information used? Whether it is complete and reliable.

Expert’s Work, whether Acceptable or Not:
> If the Expert provided Sufficient and Appropriate Audit Evidence, then we will rely on and use his work.
> If we happen not to agree with his work, ask him to perform additional procedures, if still not satisfied, you can engage the services of another Expert. If you still get same results, then give a Modified Opinion.

Question 2

ISA 620: Factors of Nature, Timing & Extent of Audit Procedures to be performed:

Answer 2

> Kind of work,
Risk of Material Misstatement involved in that matter,
Complexity of the work,
Relationship with Expert, is it first time or have previous working experience?
Whether the Expert is an internal or External person or organization.

Question 3

ISA 620: Reporting Requirements:

Answer 3

Unmodified Opinion > Give no reference of Expert work.

Modified Opinion > Required reference of Expert work.

Question 4

ISA 620: Summary of AP:

Answer 4

1.a) Identify if there is need to engage an Expert.
1.b) Is there adequacy of experts work for the purpose of our Audit.

2.a) Talk about the person or organization.
> Check gor Competences,
> Check for Capabilities,
> Check for Objectivity.

2.b) Field of expertise must be understood by Auditor:
> Nature,
>Scope,
> Objectives
* Adequacy.

2.c) Enter into a written Agreement with the Expert,
> With detailed,
> Factors

2.d) Expert will perform the work and Auditor will Check for Adequacy,
> Check for findings and conclusions.
> Check for Assumptions and matters,
> Source of information, how good and reliable?

Then you can choose to Accept based on the above and give an Opinion.

Or Not Accept, again based on the above and ask for further APs to be performed.