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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Using the work of others

Corvane Audit is completing the audit of Tilbury Plc. A valuation expert engaged by Corvane has concluded that the work was inadequate for the audit's purposes, and the expert will not revise their report. Management also refuses to allow another expert to be engaged. The matter is material to the financial statements. Under ISA 620 and ISA 705, what is the most appropriate action?

The auditor must consider modifying the opinion under ISA 705. If the expert's work is inadequate and further work or another expert cannot resolve it, sufficient appropriate audit evidence is missing, so a qualified opinion or disclaimer is needed depending on materiality and pervasiveness.

  1. AIssue an unmodified opinion with an Emphasis of Matter paragraph, because the expert was properly engaged
  2. BDisclose the expert's name in the auditor's report to explain the shortfall
  3. CResolve the matter by agreeing the valuation with management, then issue an unmodified opinion
  4. DDetermine the effect on the audit opinion, which will be modified if sufficient appropriate evidence cannot be obtained by other meansCorrect

Explanation

ISA 620 says that if the expert's work is not adequate, the auditor must agree with the expert on further work, or perform additional procedures, possibly engaging another expert. If this cannot resolve the matter, sufficient appropriate evidence has not been obtained, and the opinion is modified under ISA 705 (qualified or disclaimer depending on pervasiveness). An Emphasis of Matter cannot replace a modification.

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