Using the Work of an Expert

Using the Work of an Expert

35 The auditor shall determine the need to use the work of an expert.

36 The auditor may have the necessary skill and knowledge to plan and perform audit procedures related to fair values or may decide to use the work of an expert. In making such a determination, the auditor needs to consider the matters discussed in ASA 620.

37 If the use of such an expert is planned, under ASA 500, the auditor needs to obtain sufficient appropriate audit evidence that such work is adequate for the purposes of the audit, and complies with the requirements of ASA 620.

38 When planning to use the work of an expert, the auditor ordinarily considers whether the expert’s understanding of the definition of fair value and the method that the expert will use to determine fair value are consistent with that of management and the requirements of the applicable financial reporting framework. For example, the method used by an expert for estimating the fair value of real estate or a complex derivative, or the actuarial methodologies developed for making fair value estimates of insurance obligations, reinsurance receivables and similar items, may not be consistent with the measurement principles of the applicable financial reporting framework. Accordingly, the auditor ordinarily considers such matters, often by discussing, providing or reviewing instructions given to the expert or when reading the report of the expert.

39 In accordance with ASA 620, the auditor assesses the appropriateness of the expert’s work as audit evidence. While the reasonableness of assumptions and the appropriateness of the methods used and their application are the responsibility of the expert, the auditor ordinarily obtains an understanding of the significant assumptions and methods used, and considers whether they are appropriate, complete and reasonable, based on the auditor’s knowledge of the business and the results of other audit procedures. The auditor often considers these matters by discussing them with the expert. Paragraphs 47-57 discuss the auditor’s evaluation of significant assumptions used by management, including assumptions relied upon by management based on the work of an expert.