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CA Ravi Taori
gathering audit evidence from management's processes, it can also guide the auditor in assessing an auditor
expert's assumptions and methods.
3. Evaluation by Auditor: The auditor's procedures may focus on:
• Ensuring the auditor's expert adequately reviews the assumptions and methods used by management.
• Comparing the auditor’s expert point estimate or range with management’s estimate. Checking
assumptions and methods, and models used by the auditor’s expert.
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.
Origin of Data: Verify the origin of the data, including understanding and testing the internal controls over
the data.
Completeness & Consistency: Review the data for completeness and internal consistency to ensure its
accuracy.
Relevance: Assess the relevance of the source data used in the expert's work.
When Work of The Auditor’s Expert Is Not Adequate For The Auditor’s Purposes
Agree for Additional Work: If the auditor determines that the work of the auditor's expert is not sufficient,
they should agree with the expert to determine the nature and extent of additional work to be performed by
the expert.
Further Audit Procedures: If the issue remains unresolved after the agreement with the expert, the auditor
should conduct additional audit procedures appropriate for the specific circumstances.
Modified Opinion: If the auditor concludes that the work of the expert is still inadequate even after
performing additional audit procedures, and the issue cannot be resolved through additional audit procedures
or engaging another expert, it may be necessary for the auditor to express a modified opinion in the auditor's
report in accordance with SA 705. This is because the auditor has not obtained sufficient appropriate audit
evidence.

(CNO-SA620.160) Step 6: - Reference to The Auditor’s Expert in The Auditor’s Report
1. Unmodified opinion: 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. In some cases, such as in the
public sector, transparency may require referencing an auditor's expert.
1A. Responsibility: The auditor must clarify in the report that the reference to the expert's work does not
reduce the auditor's responsibility for the audit opinion.
2. Modified Opinion: The auditor may include a reference to an expert's work if it helps understand a
modification to the auditor's opinion. The auditor must explicitly state in the report that the reference to the
expert's work does not reduce their responsibility for the opinion.

SA 540

Auditing Accounting Estimates, Including Fair Value Accounting Estimates & Related Disclosures

(CNO-SA540.020) Scope of This SA 540
Broad
1A. Auditor's Responsibilities: The Standard on Auditing (SA) outlines the responsibilities of auditors
concerning accounting estimates, including fair value accounting estimates, and the related disclosures in a
financial statement audit.
1B. Application of SAs: The SA provides guidance on how SA 315, SA 330, and other relevant SAs should be
applied in relation to accounting estimates.
Specific
2A. Identifying misstatements: The SA includes requirements and guidance on identifying misstatements in

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