Skip to content

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

Lindqvist Audit is auditing Brevan Ltd. The engagement team has engaged an actuary to assess a defined benefit pension obligation. The actuary's report is received, and the senior notes that the actuary used a discount rate that is noticeably different from the one in management's own calculation. Which response best follows ISA 620 when evaluating the adequacy of the expert's work?

The auditor should evaluate the relevance and reasonableness of the actuary's assumptions, methods and findings and check their consistency with other audit evidence. ISA 620 requires this evaluation, so the difference in discount rates must be investigated rather than ignored or simply overridden.

  1. AAccept the actuary's figures without further work because the actuary is a qualified expert
  2. BReplace the actuary's discount rate with management's rate to remove the inconsistency
  3. CEvaluate the relevance and reasonableness of the expert's assumptions and methods, and the consistency of findings with other audit evidenceCorrect
  4. DDisclose the difference in the auditor's report as a key audit matter automatically

Explanation

ISA 620 requires the auditor to evaluate the appropriateness of the expert's work as audit evidence, including the relevance and reasonableness of findings and conclusions, their consistency with other evidence, and significant assumptions and methods used. Blind acceptance is wrong because expertise does not remove the duty to evaluate. Overriding the rate is not the auditor's role, and automatic key audit matter reporting is not required.

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