ACCA Strategic Professional · Advanced Audit and Assurance (International)

Using the Work of Others in ACCA AAA

Using the work of others means the auditor relies on internal auditors, experts, service organisations or other auditors. You keep sole responsibility for the opinion, and using others does not reduce it, subject to what law or regulation requires. For each party, assess competence, objectivity and work quality, then evaluate and document the work before relying on it.

What this chapter covers

This chapter covers the situations where you do not do all the audit work yourself. You may use the internal audit function (ISA 610), an expert you hire (ISA 620), management's expert, a service organisation that processes client transactions, or another audit firm that audits a component of a group.

The same logic runs through all four topics. First ask whether the party is competent and objective enough. Then ask whether their work is adequate for your purpose. Then decide how much to rely on it and what you must still do yourself. The auditor's report does not divide responsibility, unless law or regulation requires otherwise.

The chapter links to risk assessment, planning, internal control, group audits, the audit report and ethics. In the exam it often appears inside the 50-mark Section A case study or as a 25-mark Section B question. Both are written and scenario-based, so you must apply the rules to the facts given.

Using the work of others is a regular source of scenario requirements because it mixes technical judgement with professional skills. Examiners can ask you to evaluate whether you should rely on internal audit, assess an expert's competence and objectivity, or explain procedures for a component auditor. Good answers need a clear conclusion, points tied to the case facts and sensible recommendations. These skills earn technical marks and also the professional skills marks, such as scepticism, analysis and commercial acumen. Candidates who only list standard procedures leave marks behind.

Using the work of others: topics in the order to study them

1Using the Work of Internal Auditors (ISA 610)Start here because it sets out the core test of competence, objectivity and systematic approach, and it is the most familiar scenario.
2Using the Work of an Auditor's Expert (ISA 620)It applies the same evaluation logic to an expert you appoint, adding scope, agreement of roles and evaluating findings.
3Reliance on Management's Expert and Service OrganisationsHere the party is not under your control, so you need to learn how to assess their work as audit evidence and what reports you can use.
4Using the Work of Other Auditors and Group Audit ConsiderationsStudy it last because it brings in everything above, plus component materiality, instructions and communication within a group.

How to prepare Using the work of others

Learn one evaluation framework first, then adapt it to each party. Practise by applying it to short scenarios, because the exam is written and case-based.

Build a one-page framework: need for the work, competence, objectivity, quality of work, extent of reliance, documentation and your overall responsibility.
Learn for each topic what you can and cannot rely on. For example, you cannot use internal auditors to replace your own work on high-risk or judgemental areas.
Read each scenario for clues: reporting lines, qualifications, scope limits, conflicts of interest, past errors and time pressure.
Practise short requirements such as evaluate whether to rely, list procedures to perform, or explain the implications for the report. Always finish with a conclusion.
Learn the group audit steps: understand the component auditor, set instructions, agree materiality, review work and communicate throughout.
Do at least two full past-style questions under time limits and mark yourself on application and professional skills, not only on points listed.

Common mistakes in Using the work of others

Listing the ISA criteria without applying them to the scenario.
Fix: Quote the case fact beside each criterion, then say what it means for reliance.
Saying responsibility passes to the expert or other auditor.
Fix: State that you remain responsible for the opinion, and explain the evaluation you must still do.
Ending with no conclusion on whether to rely.
Fix: Give a clear decision, such as limited reliance or none, with reasons and the alternative procedures.
Treating management's expert and auditor's expert as the same.
Fix: Note who appoints the expert, whose objectivity is at risk, and what evaluation you must perform in each case.
Ignoring practical group issues such as component materiality, communication and access to working papers.
Fix: Cover instructions, review, communication and the actions you take if the component auditor is not adequate.
Writing generic procedures that do not reflect the risk in the case.
Fix: Link each procedure to the specific risk, assertion or weakness in the scenario.

Last-day revision: Using the work of others

You have sole responsibility for the audit opinion, and relying on others does not reduce it, subject to what law or regulation requires.
Before using internal audit, assess objectivity, competence and whether it applies a systematic, disciplined approach.
If you use the internal audit function's work, you must evaluate whether it is adequate for the audit's purposes and perform audit procedures on the body of work as a whole. Re-performance is one example of such a procedure.
For significant risks and highly judgemental areas, plan to do more of the work directly and limit your reliance on internal audit.
Direct assistance means internal auditors work under your direction. It needs supervision, review and written agreement from management and the internal auditors. Law or regulation may prohibit it in some jurisdictions.
For an auditor's expert, consider competence, capabilities and objectivity, and agree scope and roles in writing.
Evaluate the expert's assumptions, methods and source data, and the adequacy of their findings.
For management's expert, evaluate their competence, capabilities and objectivity, obtain an understanding of their work, and evaluate the appropriateness of that work as audit evidence (ISA 500).
For service organisations, understand the services and their effect on the client's controls, then consider a Type 1 or Type 2 report.
A Type 1 report covers the description and design of controls at a specific date. A Type 2 report covers the description, design and operating effectiveness over a period.
For a group audit, the group engagement partner is responsible for the direction, supervision and review of the work on components.
Give component auditors clear instructions, agree materiality and communicate on risks and findings.

Using the work of others practice questions

Using the work of others in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Using the work of others: frequently asked questions

Can I rely fully on internal audit work?

Only after you assess objectivity, competence and quality of the work. You must still evaluate whether it is adequate for your purposes and perform audit procedures on it as a whole. For significant risks and areas needing judgement, plan to do more of the work directly and limit your reliance. Reliance is rarely total.

What is the difference between an auditor's expert and management's expert?

An auditor's expert is engaged by you to help obtain audit evidence. Management's expert is used by the client to prepare the financial statements. You evaluate the management expert's work as evidence rather than direct it.

What is a Type 2 report for a service organisation?

It is an assurance report from the service organisation's auditor on the description, design and operating effectiveness of controls over a period. It usually gives more evidence than a Type 1 report, which covers the description and design of controls at one specific date.

How is this chapter examined?

It appears in written scenario questions, either in the case study or in a Section B question. You are asked to evaluate, recommend or explain, so you need to apply the rules to the facts and show professional skills.