Page 74 - CA Final PARAM Digital Book.

Basis above, the auditor concluded that it would be necessary to express a modified opinion in the
auditor’s report because the auditor has not obtained sufficient appropriate audit evidence. However, the
auditor issued a clean report and included the name of the expert in his report to reduce his responsibility
for the audit opinion. Comment.
Answer Part I -- Relevant Standards & Laws
▪ SA 620 – “Using Work Of an auditor Expert”

Part II -- Requirements of Relevant Standards & Laws
➢ Work of Expert not adequate
As per SA 620, Using the work of an Auditor’s Expert, if the auditor concludes that the work of the
auditor’s expert is not adequate for the auditor’s purposes and the auditor cannot resolve the
matter through the additional audit, which may involve further work being performed by both the
expert and the auditor, or include employing or engaging another expert, it may be necessary to
express a modified opinion in the auditor’s report in accordance with SA 705 because the auditor
has not obtained sufficient appropriate audit evidence

➢ Unmodified Opinion
In addition, the auditor shall not refer to the work of an auditor’s expert in an auditor’s report
containing an unmodified opinion unless required by law or regulation to do so. If such reference
is required by law or regulation, the auditor shall indicate in the auditor’s report that the reference
does not reduce the auditor’s responsibility for the audit opinion.

➢ Modified Opinion
If the auditor makes reference to the work of an auditor’s expert in the auditor’s report because
such reference is relevant to an understanding of a modification to the auditor’s opinion, the
auditor shall indicate in the auditor’s report that such reference does not reduce the auditor’s
responsibility for that opinion.
Facts and Conclusion
➢ In the given case, the auditor cannot reduce his responsibility by referring the name of auditor’s
expert and thereby issuing a clean report. Auditor should have issued a modified report and could
have given reference to the work of an auditor’s expert in that report if such reference was
relevant to understanding of a modification to the auditor’s opinion but even in that case the
auditor should have indicated in his report that such reference of auditor’s expert does not reduce
his responsibility for that opinion.

New Course – (SM23)
QNO Areas where Experts reports can be used & evaluation of work of expert
106.500 TITANIUM CNO-- SA620.040 / SA620.140
While doing audit, Ram, the Auditor requires reports from experts for the purpose of Audit evidence.
What types of reports/opinions he can obtain and to what extent he can rely upon the same?
Answer Using the Work of an Auditor’s Expert: As per SA 620, “Using the Work of an Auditor’s Expert”, during the
audit, the auditor may seek to obtain, in conjunction with the client or independently, audit evidence in the
form of reports, opinions, valuations and statements of an expert.

While doing audit, Ram, the auditor can obtain the following types of reports, or options or statements of
an expert for the purpose of audit evidence:
(i) The valuation of complex financial instruments, land and buildings, plant and machinery, jewellery,
works of art, antiques, intangible assets, assets acquired and liabilities assumed in business
combinations and assets that may have been impaired.
(ii) The actuarial calculation of liabilities associated with insurance contracts or employee benefit
plans.
(iii) The estimation of oil and gas reserves.
(iv) The valuation of environmental liabilities, and site clean-up costs.
(v) The interpretation of contracts, laws and regulations.
(vi) The analysis of complex or unusual tax compliance issues.

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