ISA 620 USING THE WORK OF AN EXPERT
Expert is an individual or organization processing 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 expert may be either an auditor’s internal expert or an external
expert.
Management’s expert is 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.
Following are examples of such services where the auditor may need to use the work of an expert.
Valuation of certain types of assets e.g. land and building precious stones etc as
Determination of amounts by specialized techniques or methods e.g. actuarial valuation
Measurement of work completed and to be completed on contracts in progress, e.g. stage of
completion in the case of construction of buildings
Legal opinion on pending litigations
Determining the need to use an Auditors Expert
Materiality of F/S item being considered
Whether management has used ME
Nature, timing and extent of audit procedures
The nature timing and extent of audit procedures to evaluate the adequacy of the expert’s
work for the auditor’s purposes are affected by the auditor’s evaluation of: he auditor’s
expert’s competence, capabilities and objectivity
Competence relates to the nature and level of expertise of the auditor’s expert for example,
knowledge of the expert’s qualifications.
Capability the expert’s experience and reputation
Objectivity the influence others may have on the professional or business judgment of the auditor’s
expert.
Bahria -Irfan Lakhani
Inadequacy of expert’s work
If the auditor determines that the work of the auditor’s expert is not adequate for the auditor’s
purposes, the auditor shall take appropriate steps to resolve the matter. For this they may:
Discuss any discrepancies with management
Apply additional audit procedures e.g. finding other ways to quantify the item: or
Hire another expert
Agree additional work with expert
Express an opinion other than an unqualified opinion
Competence and objectivity of an expert
Information regarding the competence capabilities and objectivity of an auditor’s expert may come
from a variety of sources, such as:
Personal experience with previous work of that expert.
Employed by entity
Financial dependence
Discussions with other auditors or others who are familiar with that expert’s work.
Knowledge of that expert’s qualifications membership of a professional body or industry
association, license to practice, or other forms of external recognition.
Published books written by that expert
Evaluating The Work Of The Expert
Accuracy of Source data used
Assumptions used and their consistency with prior periods
Discussion with other auditors who are familiar with expert works
Results of the expert’s work in the light of the auditor’s overall knowledge of the business and
of the results of other audit procedures.
Reference of expert work in an auditors report
The auditor shall not refer to the work of an auditor’s expert in an auditor’s report containing and
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.
It may be appropriate in some circumstances to refer to the auditor’s expert in an auditor’s report
containing a modified opinion, to explain the nature of the modification. In such circumstances the
auditor may need the permission of the auditor’s expert before making such a reference. The auditor
shall however, indicate in the auditor’s report that such reference does not reduce the auditor’s
responsibility for that opinion.
Bahria -Irfan Lakhani
