Your client, FNP Ltd, engaged the services of Z and Co., a firm of real estate...

Your client, FNP Ltd, engaged the services of Z and Co., a firm of real estate valuers, to perform a valuation of all real estate held by the company. As a result of this revaluation, property values on the balance sheet were significantly increased, leading to material increase in net assets backing per share.

Require;

Describe the audit procedures that would be required with respect to the valuations performed by Z and Co.

Assume that you are not satisfied with the results of procedures performed. Explain what alternative procedures could be performed.

Solutions

Expert Solution

Audit procedure performed by auditor to consider the work of management's expert.

Auditor shall evaluate competence,objectivity,capability of expert.
Auditor shall consider nature,timing,extent of audit procedures.
Auditor shall examine source of finding or conclusion made by expert.
Assess the reliability of work performed by expert.
Obtain evidence for evaluating completeness and accuracy of the information.

In case auditor is not satisfied ,there is inconsistency between audit evidence , Auditor can

obtain management representation letter
Get work performed by his expert.
Express opinion as modified or qualified.

ekkarill92 answered 1 year ago

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