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CA Intermediate · Auditing and Ethics · Audit Strategy, Audit Planning and Audit Programme

Rohan & Associates are auditing Deccan Steels Ltd. A new auditor's expert, an independent valuer, will be used for valuing a mining right. At the planning stage, which action best reflects the auditor's responsibility under SA 620 and SA 300?

The auditor should evaluate the expert's competence, capabilities and objectivity and plan the expert's involvement, while remaining solely responsible for the audit opinion. Using an expert never reduces that responsibility, and management's recommendation does not remove the need to assess objectivity.

  1. ARely on the expert fully and mention the expert's name in the audit report to reduce responsibility
  2. BEvaluate the expert's competence, capabilities and objectivity, and plan the nature, timing and extent of involvement, while retaining sole responsibility for the audit opinionCorrect
  3. CDelegate the opinion on the related balances to the expert
  4. DAvoid evaluating objectivity if the expert is recommended by management

Explanation

SA 620 requires the auditor to evaluate the expert's competence, capabilities and objectivity, and to agree on the scope of work. Using an expert does not reduce the auditor's responsibility for the opinion. Naming the expert to lessen responsibility is not permitted in an unmodified report, and management's recommendation heightens, not removes, the objectivity concern.

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