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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

Orrin Telecom is audited by Vale & Partners. Management's expert, whose valuation of a network asset is material, was engaged by Orrin. The auditor wishes to use the expert's work as audit evidence. Which statement is correct under ISA 500?

The auditor must evaluate the management's expert's competence, capabilities and objectivity, understand the expert's work, and judge whether that work is appropriate evidence for the assertion concerned. A qualification alone is insufficient, and no automatic duplication by an auditor's own expert is required.

  1. AThe auditor need only confirm the expert holds a professional qualification
  2. BThe auditor must evaluate the expert's competence, capabilities and objectivity, understand their work, and evaluate the appropriateness of that work as audit evidence for the relevant assertionCorrect
  3. CThe auditor may use the work without evaluation because the expert is independent of the auditor
  4. DThe auditor must reperform the entire valuation using the auditor's own expert

Explanation

ISA 500 requires the auditor, when using the work of a management's expert, to evaluate competence, capabilities and objectivity, obtain an understanding of the work, and evaluate its appropriateness as evidence for the assertion. Qualification alone is not enough. A separate auditor's expert is not mandatory, though it may be a way of doing this. Independence from the auditor is irrelevant, since the concern is management's influence.

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