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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Evidence and testing considerations

Auditor Pryce & Co engaged an external valuer to assist with the audit of investment property at Elmstead Holdings. The valuer's report is unqualified, but the auditor's own analysis shows the valuation assumptions are inconsistent with market data. What should the auditor do?

The auditor should discuss the inconsistency with the expert and, if it remains unresolved, perform additional procedures such as using another expert, then consider the effect on the opinion. ISA 620 makes the auditor responsible for evaluating the adequacy of the expert's work and the opinion.

  1. AAccept the valuer's conclusion, because the auditor is not qualified to challenge a specialist
  2. BDiscuss with the expert and, if the matter is unresolved, perform additional procedures such as engaging another expert, and consider the effect on the audit opinionCorrect
  3. CDisclaim responsibility in the audit report because the expert's work was relied on
  4. DAdjust the valuation unilaterally to the auditor's estimate without further discussion

Explanation

ISA 620 requires the auditor to evaluate the adequacy of the expert's work, including the reasonableness of assumptions. If it is inadequate, the auditor agrees further work with the expert or performs other procedures, and considers the opinion if evidence remains insufficient. The auditor cannot shift responsibility or simply accept the work.

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