WHO IS AUDITOR’S EXPERT AND WHAT THEY DO IN AN AUDIT WORK ?

Auditors are experts in accounting and auditing matters, but they are not reasonably expected to be experts in any other field. Therefore, in performing the audit works the auditor needs the assistance from an expert to assist the auditor in obtaining sufficient appropriate audit evidence.

ISA 620 deals with using the work of an auditor’s expert. As stated in para.3 :

The auditor has sole responsibility for the audit opinion expressed, and that responsibility is not reduced by the auditor’s use of the work of an auditor’s expert. Nonetheless, if the auditor using the work of an auditor’s expert, having followed this ISA, concludes that the work of that expert is adequate for the auditor’s purposes, the auditor may accept that expert’s findings or conclusions in the expert’s field as appropriate audit evidence

So, WHO IS AUDITOR’S EXPERT that meet the definition of ISA 620 ?

Auditor’s expert is an individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the auditor to assist the auditor in obtaining sufficient appropriate audit evidence. An auditor’s expert may be either an auditor’s internal expert (who is a partner or staff, including temporary staff, of the auditor’s firm or a network firm), or an auditor’s external expert.

Expertise in a field other than accounting or auditing may include expertise in relation to such matters as :

• The valuation of complex financial instruments, land and buildings, plant and machinery, jewelry, works of art, antiques, intangible assets, assets acquired and liabilities assumed in business combinations and assets that may have been impaired
• The actuarial calculation of liabilities associated with insurance contracts or employee benefit plans
• The estimation of oil and gas reserves
• The valuation of environmental liabilities, and site clean-up costs
• The interpretation of contracts, laws and regulations
• The analysis of complex or unusual tax compliance issues

As stated in para. A2 of ISA 620, in many cases, distinguishing between expertise in accounting or auditing, and expertise in another field, will be straightforward, even where this involves a specialized area of accounting or auditing. For example, an individual with expertise in applying methods of accounting for deferred income tax can often be easily distinguished from an expert in taxation law. The former is not an expert for the purposes of ISA 620 as this constitutes accounting expertise; the latter is an expert for the purposes of ISA 620 as this constitutes legal expertise. Similar distinctions may also be able to be made in other areas, for example, between expertise in methods of accounting for financial instruments, and expertise in complex modeling for the purpose of valuing financial instruments.

In some cases, however, particularly those involving an emerging area of accounting or auditing expertise, distinguishing between specialized areas of accounting or auditing, and expertise in another field, will be a matter of professional judgment. Applicable professional rules and standards regarding education and competency requirements for accountants and auditors may assist the auditor in exercising that judgment (HRD).