Introduction to AU-C 620
AU-C 620 provides guidance on using the work of an auditor's specialist in an audit. The standard emphasizes the importance of the auditor's responsibility to plan, supervise, and evaluate the work of the specialist.
The use of a specialist can enhance the quality of the audit, particularly when dealing with complex or specialized areas, such as valuations or information technology systems.
Determining the Need for a Specialist
The auditor must determine whether the use of a specialist is necessary to obtain sufficient appropriate audit evidence. This decision is based on the auditor's understanding of the entity's business and the nature of the audit engagement.
Factors to consider include the complexity of the area, the availability of internal expertise, and the potential impact on the financial statements.
The Role of the Auditor's Specialist
The specialist's role is to provide expertise in a specific area, such as actuarial science or engineering. The specialist's work is used by the auditor to support the audit opinion.
The auditor remains responsible for the overall audit opinion and must evaluate the specialist's work to ensure it is adequate and reliable.
Supervising and Evaluating the Specialist's Work
The auditor must supervise and evaluate the specialist's work to ensure it meets the requirements of AU-C 620. This includes reviewing the specialist's report and evaluating the adequacy of the specialist's procedures.
The auditor must also consider the specialist's objectivity and independence, as well as any potential conflicts of interest.
Documentation and Reporting Requirements
The auditor must document the specialist's work and the evaluation of that work. This includes the specialist's report, the auditor's evaluation of the report, and any conclusions drawn from the specialist's work.
The auditor's report must also disclose the use of a specialist and the nature of the specialist's work, if it has a significant impact on the financial statements.
Frequently Asked Questions
What is the purpose of AU-C 620?
The purpose of AU-C 620 is to provide guidance on using the work of an auditor's specialist in an audit.
When is a specialist required in an audit?
A specialist is required when the auditor determines that the use of a specialist is necessary to obtain sufficient appropriate audit evidence.
What is the role of the auditor's specialist?
The specialist's role is to provide expertise in a specific area, such as actuarial science or engineering, to support the audit opinion.
Who is responsible for the overall audit opinion?
The auditor is responsible for the overall audit opinion, even when a specialist is used.
What must the auditor consider when evaluating the specialist's work?
The auditor must consider the specialist's objectivity and independence, as well as any potential conflicts of interest.
What documentation is required when using a specialist?
The auditor must document the specialist's work, the evaluation of that work, and any conclusions drawn from the specialist's work.