Question

Which of the following procedures is the auditor least likely to perform when an auditor decides to use the work of an auditor's specialist as audit evidence?

a. Obtain knowledge of the specialist's qualifications.
b. Refer to the auditor's specialist in the audit report to indicate a division of responsibility.
c. Review the working papers of the auditor's specialist.
d. Inquire of the entity and the auditor's specialist about any known interests that the entity has with the auditor's external specialist that may affect that specialist's objectivity.

Answer 1

Solution: The correct option is “b” i.e Refer to the auditor's specialist in the audit report to indicate a division of responsibility

The procedure that the auditor is least likely to perform when an auditor decides to use the work of an auditor's specialist as audit evidence is to refer to the auditor's specialist in the audit report to indicate a division of responsibility. This is because when the principal auditor decides to make use of the audit of the another auditor in his report then the principal auditor should indicate the division of responsibility as between that portion of the financial statements covered by his own audit and that covered by the other auditor but this doesn’t hold true when he uses the work of a specialist instead of another auditor.

The other procedures in “a , c and d” will definitely be followed by the auditor.That is to say that the auditor will definitely (a)obtain knowledge of the specialist's qualifications as the auditor should ensure that specialist possesses the necessary skill or knowledge in the particular field for which the auditor has taken his expert opinion and this the auditor may do by checking the professional certification, license and the specialist's reputation and experience in the type of work that the specialist excels and specializes in.The auditor will also definitely (c) Review the working papers of the auditor's specialist in order to understand the nature of the work performed by the specialist in order to comprehend the objectives , scope and methods or assumptions used by the specialist. The auditor will also definitely (d) Inquire of the entity and the auditor's specialist about any known interests that the entity has with the auditor's external specialist that may affect that specialist's objectivity as if a specialist does not have a relationship with the client then the specialist's work usually will provide the auditor with greater assurance of reliability because if the specialist has a relationship with the client, the auditor should assess the risk that the specialist's objectivity might be impaired as a result of the relationship.