Guide to Using International Standards on Auditing in - IFAC

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<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
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Relevant Extracts from ISAs
620.6 For purposes of the ISAs, the following terms have the meanings attributed below:
(a) Audi<strong>to</strong>r’s expert—An individual or organization possessing expertise in a field other than
accounting or auditing, whose work in that field is used by the audi<strong>to</strong>r <strong>to</strong> assist the audi<strong>to</strong>r
in obtaining sufficient appropriate audit evidence. An audi<strong>to</strong>r’s expert may be either
an audi<strong>to</strong>r’s internal expert (who is a partner or staff, including temporary staff, of the
audi<strong>to</strong>r’s firm or a network firm), or an audi<strong>to</strong>r’s external expert. (Ref: Para. A1-A3)
(b) Expertise—Skills, knowledge and experience in a particular field.
(c) Management’s expert—An individual or organization possessing expertise in a field other
than accounting or auditing, whose work in that field is used by the entity <strong>to</strong> assist the
entity in preparing the financial statements
In some situations, the audi<strong>to</strong>r may require expertise (other than accounting or auditing) <strong>to</strong> obtain sufficient
appropriate audit evidence. This could involve using the work of an audi<strong>to</strong>r’s expert who would provide audit
evidence in the form of reports, opinions, valuations, and statements. Some examples are included in the
exhibit below.
Exhibit 15.8-2
Need for an
Audi<strong>to</strong>r’s Expert?
• Specialized inven<strong>to</strong>ry counters;
• Valuations of assets such as land and buildings, plant and machinery, works of
art, precious s<strong>to</strong>nes, inven<strong>to</strong>ry, and complex financial instruments;
• Determination of quantities or physical condition of assets such as minerals
s<strong>to</strong>red in s<strong>to</strong>ckpiles, underground mineral and petroleum reserves, and the
remaining useful life of plant and machinery;
• Determination of amounts using specialized techniques or methods such as
actuarial valuation;
• The analysis of complex or unusual tax-compliance issues;
• The measurement of work completed, and <strong>to</strong> be completed, on contracts in
progress; and
• Legal opinions concerning interpretations of agreements, statutes and regulations.
This standard provides guidance on how the work of an audi<strong>to</strong>r’s expert can be used as appropriate audit evidence.
In some cases, an audi<strong>to</strong>r who is not an expert in a relevant field other than accounting or auditing may be
able <strong>to</strong> obtain a sufficient understanding of that field <strong>to</strong> perform the audit without an audi<strong>to</strong>r’s expert. Such
an understanding may be obtained through:
• Experience in auditing entities requiring similar expertise.
• Education or professional development in the particular field. This may include formal courses or discussion
(but not consultation where all the relevant facts are provided) with experts in the relevant field.
• Discussion with audi<strong>to</strong>rs who have performed similar engagements.
Note: Regardless of whether the work of an expert is used or not, the audi<strong>to</strong>r maintains sole responsibility
for the audit opinion expressed.