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MGAD10H3 (23)
Kevin Ha (16)
Chapter 5

MGTD60 - Chapter 5 (Part II)

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Financial Accounting
Kevin Ha

MGTD60H3Chapter 5Part IIPages 189193 196203 54Using the Work of an ExpertExpertSomeone with skills knowledge and experience required to aid the auditor when gathering sufficient appropriate evidenceAn expert may be a member of the audit firm who is not a member of the audit team an employee of the client or a person independent of both the audit firm and the clientAuditors use experts for valuation for things such as real estate works of art collections and jewelry and actuaries to calculate liabilities related to employee future benefits and oil and gas reservesAn auditor first assesses whether an expert is requiredThen auditor determines the scope of work to be carried out by the expert if heshe is neededAuditor then assesses the experts competency and its work which will then be used as a base to form an audit opinion541Assessing the Need to Use an ExpertThe need to engage the services of an expert depends on oThe knowledge of the audit team o The significance and complexity of the item being assessed o The availability of appropriate alternative corroborating evidenceThe less knowledge of an audit team has of the item under consideration the greater the risk of material misstatement and the less corroborating evidence available the more likely an auditor will conclude that an expert is requiredOther factors to include are o The risk of material misstatement relating to the item o Experience and qualification of the audit team o Materiality of the item 542Determining the Scope of the Work to be Carried OutIt is determined by the auditor and communicated to the expertInvolves setting the nature timing and extent of work to be completed by the expertWritten instructions to an expert can cover the issues that the expert is to report upon such as market price of properties owned sources of data and etcIncludes potential report formats and specifics to be coveredRemember that the expert is not responsible for the audit opinion 543Assessing the Competence and Capability of the ExpertInvolves evaluation of the experts qualifications as a member of a relevant professional bodyIncludes reputation within its field and the extent of their experience in providing the type of opinion or report 544Assessing the Objectivity of the Expert
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