External Information Source (Ref: Para. External Information Source (Ref: Para. 5(d))

External Information Source (Ref: Para. 5(d))

1. External information sources may include pricing services, governmental organisations, central banks or recognised stock exchanges. Examples of information that may be obtained from external information sources include:

• Prices and pricing related data;
• Macro-economic data, such as historical and forecast unemployment rates and economic growth rates, or census data;
• Credit history data;
• Industry specific data, such as an index of reclamation costs for certain extractive industries, or viewership information or ratings used to determine advertising revenue in the entertainment industry; and
• Mortality tables used to determine liabilities in the life insurance and superannuation sectors.

1. A particular set of information is more likely to be suitable for use by a broad range of users and less likely to be subject to influence by any particular user if the external individual or organisation provides it to the public for free, or makes it available to a wide range of users in return for payment of a fee. Judgement may be required in determining whether the information is suitable for use by a broad range of users, taking into account the ability of the entity to influence the external information source.
2. An external individual or organisation cannot, in respect of any particular set of information, be both an external information source and a management’s expert, or service organisation or auditor’s expert.
3. However, an external individual or organisation may, for example, be acting as a management’s expert when providing a particular set of information, but may be acting as an external information source when providing a different set of information. In some circumstances, professional judgement may be needed to determine whether an external individual or organisation is acting as an external information source or as a management’s expert with respect to a particular set of information. In other circumstances, the distinction may be clear. For example:

• An external individual or organisation may be providing information about real estate prices that is suitable for use by a broad range of users, for example, information made generally available pertaining to a geographical region, and be determined to be an external information source with respect to that set of information. The same external organisation may also be acting as a management’s or auditor’s expert in providing commissioned valuations, with respect to the entity’s real estate portfolio specifically tailored for the entity’s facts and circumstances.
• Some actuarial organisations publish mortality tables for general use which, when used by an entity, would generally be considered to be information from an external information source. The same actuarial organisation may also be a management’s expert with respect to different information tailored to the specific circumstances of the entity to help management determine the superannuation liability for several of the entity’s superannuation plans.