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Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.

      

Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.

Required:
a) The necessity for reliance on specialist.
b) The extent to which the specialist should be independent?
c) Competence of the specialist.

  

Answers


Wilfred
a) An expert or a specialist is a person possessing specialised skills, knowledge and experience in another field other than auditing and accounting. From his training and experience an auditor only has general knowledge on matters outside his profession and he is not expected to have the shills of a person trained or qualified to work in another profession. Consequently the auditor may need advice of other experts e.g. lawyers in arriving at the legal interpretation of legal cases against a client Situations Where The Auditor May Require Advice of an Expert
- Legal interpretation of contracts, laws and regulations
- Valuation of certain types of assets e.g. land and buildings, precious stones and minerals.
- In determining quantities and physical condition of assets e.g. underground minerals/quarries.
- Actuarial valuations;
- Measurement of work completed/to be completed in contracts

b) The extent to which the specialist should be independent
The auditor should evaluate the independence of the expert before relying on his work. If the expert is not independent of the client then there is a risk that the opinion given by the expert could be in the favour of the client. The auditor should therefore be on the look out for any factors that could impair the specialist‘s independence.
The risk of independence being impaired increases where the expert is employed by the client; in such cases he owes his loyalty to the client, or where he is related financially with the client.

c) The auditor should seek reasonable assurance that the expert‘s work constitutes appropriate audit evidence in support of the financial statements. The auditor should consider;
The skills and competence of the expert. The auditor should consider the expert‘s skills and competence in the particular profession. This is done by considering the expert‘s professional qualifications, license or membership of an appropriate professional body. The experience and reputation in the field in which the auditor is seeking evidence.
Wilfykil answered the question on February 21, 2019 at 08:57


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