ISA 620 deals with the use of the work of an expert by the auditor
The auditor may not have the expertise to make judgements on all aspects of a clients’ business and may seek help in the form of an expert.
Examples of this are specialist inventory, property valuation and complex work in progress.
Why rely on experts?
Auditors do not have to be experts in everything
Often it's effective and efficient to do so
They need to where they lack the skills
How much to rely on experts?
Auditor needs to make judgements on:
Their Independence, Objectivity and Competence
Is a member of a recognised professional body?
How long has the expert been a member of the recognised body?
How much experience does the expert have?
Does the expert have any financial interest in the company?
Does the expert have any personal relationship with any director in the company?
Is the fee paid for the service reasonable and a fair, market based price?
This is based on their qualifications and their experience
If an expert in the inventory of the entity being audited is consulted on valuation of inventory, but works for a subsidiary of the entity then the auditor may consider them to be not sufficiently independent
Before any work is performed by the expert the auditor should agree in writing:
Nature, scope and objectives
Roles and responsibilities
Nature of communication
Confidentiality of expert
After the work - Auditor ensures it is appropriate
This means considering:
Consistency with other evidence
Any significant assumptions made
The accuracy of source data
No reference in the Audit Report
The auditor should make no reference to the use of the work of others in the audit report
It is the auditors’ opinion in the report and the work of others is simply one type of evidence that may be used, if sufficient and reliable, to come to that opinion