Question

Any other experts that can be relied in performing the audit engagement other than internal auditor?

Answer 1

Expert can be defined an individual or organization having an expertise in any 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.

Auditors are expert in accounting and auditing matters but they are not expected to an expert in any other areas or matters. In such cases, audior may use the work on an expert in order to reduce risk of material misstatements on financial statements. Such expertise may be required in relation to :

1. Valuation of Land and Buldings, Plant and Machinery, Jewellery, Intangible Assets, complex financial instruments, impaired assets, site clean up costs, environmental liabilities

2. Estimation of Gas reserves, mining and oil reserves.

3. Acturial Valuation - Calculation of Liabilites related with employee benefit plans and insurance contracts.

4. Analysis of Complex tax situation or Unusal tax compliance.

5. Interpretation of laws, contract and regulations.

Requirements related to auditor’s expert work

- Auditor should evaluate the expert competence, capabilities, and objectivity for the auditor’s purpose.

- Understand the nature, scope, and objectives of expert work and evaluate the adequacy of the expert work.

- Evaluate the relevance and reasonableness of the expert finding or conclusion.

If Auditor is of the opinion that expert’ work is not adequate, then the auditor should

(i) Determine the nature and extent of further work to be performed by the expert

(ii) Perform further audit procedures appropriate to the situation.