Page 72 - CA Final PARAM Digital Book.

The respective roles and responsibilities of the auditor and that expert.
The nature, timing and extent of communication between the auditor and that expert,
including the form of any report to be provided by that expert; and

When the work of the auditor’s expert relates to the auditor’s conclusions regarding a significant
risk, both a formal written report at the conclusion of that expert’s work, and oral reports as the
work progresses, may be appropriate. Identification of specific partners or staff who will liaise with
the auditor’s expert, and procedures for communication between that expert and the entity, assists
timely and effective communication, particularly on larger engagements.

➢ The need for the auditor’s expert to observe confidentiality requirements.
It is necessary for the confidentiality provisions of relevant ethical requirements that apply to
the auditor also to apply to the auditor’s expert. Additional requirements may be imposed by law
or regulation. The entity may also have requested that specific confidentiality provisions be agreed
with auditor’s external experts.

Facts and Conclusion
➢ In the instant case X Ltd. had various derivative contracts – options, forward contracts, interest rate
swaps etc. which were required to be fair valued for which company got the fair valuation done
through an external third party. The statutory auditors of the company involved an auditor’s expert
to audit valuation of derivatives. Considering the complexity involved in the valuation and volume
of derivatives and also due to the fact that the auditor and auditor’s expert were new to each other,
auditor should have signed a formal agreement/ engagement letter with the auditor’s expert in
respect of the work assigned to him in accordance with SA 220.

QNO Evaluating work of Expert Old Course – (M08R, PM17, SM17, N18R, N18E, M19E, SM21,M23M)
106.000 TITANIUM CNO—SA620.140
State what may be the evaluative or review procedures that the Statutory Auditor may do before
concluding as to relevance and reasonableness of Auditor’s Expert work for using it for his audit purposes.
OR
KRP Ltd., at its annual general meeting, appointed Mr. X, Mr. Y and Mr. Z as joint auditors to conduct
auditing for the financial year 2017-18. For the valuation of gratuity scheme of the company, Mr. X, Mr. Y
and Mr. Z wanted to refer their own known actuaries. Due to difference of opinion, all the joint auditors
consulted their respective actuaries. Subsequently, major difference was found in the actuary reports.
However, Mr. X agreed to Mr. Y’s actuary report, though, Mr. Z did not. Mr. X contends that Mr. Y’s actuary
report shall be considered in audit report due to majority of votes. Now, Mr. Z is in dilemma. Explain the
responsibility of auditors, in case, report made by Mr. Y’s actuary, later on, found faulty.
OR
Briefly explain how an auditor can use the work of an expert.
OR
CA Dabu has been appointed as an auditor of M/s MAP Techno craft Ltd. to conduct statutory audit. While
conducting audit, he came across some difficulties which the management could not explain to him

www.auditguru.in PARAM 3.22 | P a g e