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

Harbour & Lane, auditors of Zenith Mining Co, plan to use a geologist's report on ore reserves. The geologist is employed by Zenith and prepared the report for management to support depreciation calculations. Under ISA 500, how should the geologist be classified?

The geologist is a management's expert, because the person has expertise outside accounting and auditing and the entity uses the work to prepare its financial statements. An auditor's expert would be engaged by the audit firm, which is not the case here.

  1. AAn auditor's expert, because the report is technical in nature
  2. BA management's expert, because the geologist's work is used by the entity in preparing its financial statementsCorrect
  3. CA component auditor, because the work relates to a specific balance
  4. DA service organisation, because the work is performed outside the finance function

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 assist in preparing the financial statements. The geologist's report supports depreciation, so this definition applies. The auditor's expert is engaged by the auditor, which did not happen here.

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