During the audit process, there are times and situations where the auditor is supposed to rely on some external work that can help them analyze the situation in a much better manner.

In this regard, it is quite rudimentary to auditors are able to account for the relevant protocols in place, so that they use the work with proper compliance in place.

In this regard, it can be seen that the auditor might need to use the work of an expert, which can provide knowledge that is relevant to the audit.

During the audit process, there might be situations or information that the auditor might not have a complete idea of. Therefore, in this regard, they can use the work of an expert.

According to the International Standards of Accounting, it can be seen that ISA 620 has been designed to provide a guideline to auditors regarding the scope of the work that needs to be included in the case where auditors take help from an external expert.

In this regard, the scope of the work that an expert can be used for is legal opinions (law and legislation), specialist valuation areas (property or any other pension liabilities, or the analysis of complex or any unusual tax compliance-related issues.

In the same manner, it can also be seen that ISA is designed to cover the work of the auditor’s expert in the sense that the expert is employed by the auditor, and not by the entity itself.

As a matter of fact, there is a need to ensure that the requirement of using expert work is properly identified, and therefore, is supposed to be used under given circumstances only.

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Assessing the Need for an Expert

As a part of need assessment for experts, an inherent cost is incurred when the work conducted by experts is utilized.

The overall work and scope of the work carried out by the expert should be analyzed and evaluated using a cost/benefit analysis.

Factually, it can also be seen that when deciding the use of the expert, the auditor is likely to consider factors that include nature, significance and the complexity of matter at hand.

In the same manner, they should also analyze the risk of material misstatement, as well as the underlying availability of alternative sources of audit evidence.

Assessing the work of an Expert

Under ISA 620, the auditors are required to apply the procedures when evaluating the inclusion of work carried out by the expert.

Firstly, they are supposed to assess the underlying capabilities and objectivity of the expert using personal discussions, reviews, or any other method that might help them gain evidence about the underlying credibility of the expert.

Therefore, the overall rationale behind using the work of the expert revolves around discussions and analysis about the areas of knowledge that might be helpful for the auditor.

After the terms have been agreed upon the expert (including nature, scope, responsibilities, confidentiality requirements and the form of a report), there is also a need to evaluate the adequacy of the expert’s work, which includes dimensions of reasonableness, consistency of conclusions with other audit evidence, as well as relevance, completeness, and accuracy of source data.

In the cases where the auditor is not fully satisfied with the work that had been carried out by the expert, it can be seen that they can then require additional work with the expert, or subsequently perform additional audit procedures.

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The underlying purpose in this regard is to enable auditors to gather substantial knowledge which can help them put forth their declarations with a reasonable amount of surety.

Conclusion

Therefore, it can be seen that the work of an auditor’s expert can be utilized in order to get knowledge and information about aspects and areas regarding which the auditor himself does not have sufficient knowledge.

As a matter of fact, it can also be seen that this particular work of the expert needs to be undertaken with proper protocols and then should be subsequently disclosed in the financial statements in order for stakeholders to be aware that external resources have been utilized to complete the audit assignment.

The selection criteria of the expert are also stringent because it has the capacity to directly impact the underlying audit decisions that would be taken by the auditor.

Therefore, the extent of professionalism, as well as the integrity of the expert is also highly important to ensure that the work carried out by the expert meets the quality standards they have set.