Question

What do you think, does the auditor always need to engage another independent specialist to test the work of the specialist hired by the organization to determine the value of the tangible assets other than goodwill? Explain, incorporating the idea of the importance of auditor professional skepticism.

Answer 1

Answer:

The auditor isn't required to connect with another independent specialist to test work by the expert/specialist recruited by the organization to decide the value of the tangible and intangible assets.How ever ,the valuation of specific assets and liabilities is difficult and includes huge assumptions.For instance ,pension benefits and post retirement commitments ,value of property ,plant and equipment of heavy enterprises and estimation of elusive or intangible assets for website organizations ,in such cases ,the auditor ought to acquire a comprehension of the unpredictability associated with discovering the values and engage specialist to discover their values.

In the event that the auditor thinks that,

i)The specialist engaged by the customer probably won't be autonomous/independent and have close relationships with the client;or

ii)The strategies adopted by the specialist are not reliable;or

iii)The organization does not have a good history about the valuation of assets and liabilities in prior acquisitions ; or

iv)The administration is under pressure to report certain degree of income or earnings  

In such cases ,the auditor should utilize his expert skepticism to decide the dependence that can be put on the valuation of assets and liabilities on the speicalist employed by the customer and on the senior administration . Thus,determine the requirement for another specialist to ascertain the valuation.