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SA 620 - Using the Work of an Auditor’s Expert
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Revision Videos of SAs For CA Final by Neeraj Arora For Edu91
individual or organisation possessing expertise in a field other than accounting or
auditing
work in that field is used by the auditor to assist the auditor in obtaining SAAE
1. Auditor's Expert
Definitions
Internal Expert (partner or staff)
External Expert
2. Expertise Skills, knowledge and experience in a particular field
1A. complex financial instruments
1. Valuation
1B. environmental liabilities
We need an AEx only
when the Field of
2. actuarial calculation
expertise is other
than accounting and
3. estimation of oil and gas reserves
auditing- Examples
of such fields
4. interpretation
5. analysis of complex or unusual tax compliance issues.
Understanding E/E/IC
IA- ROMM
Areas in which -
expert may be
Response to Assessed risk at financial statement level
needed to assist the
auditor
Response to Assessed risk at assertion level
Determining the
Need for an
Evaluating SAAE in forming Opinion on FS
Auditor’s Expert
Nature, scope and objectives
employed by the entity?
When management has used a
management's expert in preparing
1. Management has management's control or influence the financial statements, the
used a auditor's decision on whether to use
an auditor's expert may also be
management’s competence and capabilities influenced by such factors as
Considerations
expert
when deciding
subject to technical performance standards?
whether to use an
auditor’s expert
controls within the entity over the management’s expert’s
work.
2. Matter Nature, Significance and complexity
3. ROMM
4. Procedures required to respond to identified risks
Obtaining an
NSO - Determine the nature, scope and objectives of that expert’s work
Understanding of
the Field of To
Expertise of the
Adequacy - Evaluate the adequacy of that work for the auditor’s purposes.
Auditor's Expert
Findings or relevance and reasonableness and consistency with other
Auditor will
conclusions audit evidence
evaluate the
following in order to
Assumptions and
Evaluate the Relevance and reasonableness.
methods
adequacy of AEs
work
Source data the relevance, completeness, and accuracy.
Inquiries Auditor's Expert
Reviewing AEs working papers and reports
Evaluating the
Adequacy of the
Observing AEs work
Auditor's Experts
Work
Examining data
Corroborative
Procedures Confirmation from third party
procedures
Analytical procedures
Re-performacnce
Discussion Another expert
Discussion Management
Competence Nature and level of expertise
Ability of the auditor’s expert to exercise that competence in
Capability
the circumstances of the engagement.
Financial
Business
Significantly affect
whether the work of
Personal
the auditor’s expert 1. Known interests
will be adequate for or relationships
Objectivity (ability Provision of other
the auditor’s
to perform those services
purposes. How to Evaluate?
tasks without
allowing bias) WR from Auditor's
Expert.
Evaluate, sufficient
The Competence, 2. Safeguards,
to reduce threats to
Capabilities and Professional
an
Objectivity of the requirements.
___________________________
Auditor’s Expert
1. Personal experience
2A. Auditor's Expert
2. Discussion
2B. Others
Qualification
Source of
membership
Information for CCO
3. Knowledge
License
Other external recognition
4. Published papers or books written
5. auditor’s firm’s quality control policies and procedures
NSO - nature, scope and objectives of that expert’s work
RRR - respective roles and responsibilities
Matters
COMMUNICATION- nature, timing and extent of communication (including form and
report - if any)
CONFIDENTIALITY
Agreement with the INFORMATION access to sensitive or confidential entity information.
Auditor’s Expert -
Shall agree on RRR - Respective
following matters roles or Different than normally expected
Factors suggesting
responsibilities
the need for more
detailed and written
Legal requirements Multi-jurisdictional legal or regulatory requirements
agreement between
the auditor and
COMPLEX MATTER
auditor’s expert.
Previously not used the work of that expert
Greater Extent and Significance of work of expert
indicate in the
auditor’s report
that the reference
does not reduce the
Yes Refer
Reference required auditor’s
Unmodified opinion
by L/R responsibility for
the audit opinion.
Reference to the No Shall not refer
Auditor's Expert in
the Auditor's Report indicate in the
auditor’s report
that the reference
does not reduce the
reference is relevant Yes Refer
auditor’s
Modified Opinion to an understanding
responsibility for
of a modification
the audit opinion.
No Shall not refer
1. Nature of the MORE EXTENSIVE PROCEDURES- significant matter that
matter involves subjective and complex judgments.
MORE EXTENSIVE PROCEDURES- ROMM relates to areas
2. ROMM
where expert is required and is high
MORE EXTENSIVE PROCEDURES- performing procedures that
3. Significance of
are integral to the audit, rather than being consulted to
that expert's work
provide advice on an individual matter.
Factors to be for Audit
Nature, Timing and
considered - NET of
Extent of Audit
AP with respect o
Procedures MORE EXTENSIVE PROCEDURES- not previously used the
SA 620 4. auditor's
work of the auditor's expert, and has no prior knowledge of
knowledge of and
that expert's competence, capabilities and objectivity.
experience
5. expert is subject
to the auditor's
MORE EXTENSIVE PROCEDURES -Expert is an auditor's
firm's quality
external exper
control policies and
procedures?
