Page 73 - CA Final PARAM Digital Book.

properly and, therefore, he decided to take services of Mr. Jay , an engineering consultant . Mr. Jay
performed his work and submitted details to CA Dabu. State the specific procedure which CA Dabu should
follow to evaluate the adequacy of work performed by Mr. Jay.
Answer Part I -- Relevant Standards & Laws
▪ SA 620 – “Using Work Of an auditors Expert”

Part II -- Requirements of Relevant Standards & Laws
➢ Evaluating the Adequacy of the Auditor’s Expert’s Work:
As per SA 620 Using the work of an Auditor’s Expert, the auditor shall evaluate the adequacy of
the auditor’s expert’s work for the auditor’s purposes, including the relevance and reasonableness
of that expert’s findings or conclusions, and their consistency with other audit evidence, etc.

➢ Specific Procedures
Enquiries of the auditor’s expert.
Reviewing the auditor’s expert’s working papers and reports
Corroborative procedure such as-
• Observing the auditor’s expert’s work
• Examining the published data, such as statistical reports from reputed source
• Confirming the relevant matters with third parties
• Performing detailed analytical procedure to see whether principles of materiality
aspects considered.
• Re performing calculations
Discussions with another expert with relevant expertise when, for example, the findings
or the conclusion of the auditor’s expert are not consistent with other audit evidence.
Discussing the expert’s report with the management.

➢ Evaluation of the adequacy of the auditor’s expert’s work
Therefore, as per SA 620 on “Using the Work of an Auditor’s Expert”, the auditor shall evaluate
the adequacy of the auditor’s expert’s work for the auditor’s purposes, including:
The relevance and reasonableness of that expert’s findings or conclusions, and their
consistency with other audit evidence;
If that expert’s work involves use of significant assumptions and methods, the
relevance and reasonableness of those assumptions and methods in the
circumstances; and
If that expert’s work involves the use of source data that is significant to that expert’s
work, the relevance, completeness, and accuracy of that source data.

➢ Inadequate Work
If the auditor determines that the work of the auditor’s expert is not adequate for the auditor’s
purposes, the auditor shall:
Agree with that expert on the nature and extent of further work to be performed by
that expert; or
Perform further audit procedures appropriate to the circumstances.

QNO Reference to Work of Expert in auditors report Old Course – (M19M,M23E)
106.100 TITANIUM CNO—SA620.160
O Ltd. is in the business of manufacturing of steel. The manufacturing process requires raw material as
iron ore for which large stock was maintained by the company at year end – 31 March 2019. The nature of
raw material is such that its physical verification requires involvement of an expert. Management hired
their expert for stock take and auditors also involved auditor’s expert for the stock take.

The auditor observed that the work of the auditor’s expert was not adequate for auditor’s purposes and
the auditor could not resolve the matter through additional audit procedures which included further work
performed by both the auditor’s expert and the auditor.

www.auditguru.in PARAM 3.23 | P a g e