Skip to content

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

Harbour Components Ltd engages Sterling Valuations, an external firm, to value its investment properties. Management uses the valuation in the financial statements, and the audit team at Delta & Co plans to use it as audit evidence. Under ISA 500, which description best fits Sterling Valuations?

Sterling Valuations is a management's expert. It was engaged by the entity, has expertise outside accounting and auditing, and its valuation is used to prepare the financial statements. It would be an auditor's expert only if the audit firm had engaged it.

  1. AAn auditor's expert, because the valuation is used as audit evidence
  2. BA management's expert, because the firm was engaged by the entity and its work is used in preparing the financial statementsCorrect
  3. CA service organisation, because it provides a recurring service to the entity
  4. DAn internal auditor, because it performs work on assets owned by the entity

Explanation

ISA 500 defines a management's expert as an individual or organisation with expertise in a field other than accounting or auditing whose work is used by the entity to help prepare the financial statements. Sterling was engaged by the entity, not the auditor. Describing it as an auditor's expert is wrong because the auditor did not engage it, even though the auditor tests its work.

Did you get it right without looking?

One question tells you little. A timed set on Using the work of others shows your real accuracy, how long you take and where you lose marks.

Practise Using the work of othersFree diagnostic mock

More Using the work of others questions