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USING THE WORK OF


OTHERS
USING THE WORK OF ANOTHER
AUDITOR (ISA 600)
1. Purpose: The purpose of this SA is to
establish standards to be applied in
situations where an auditor (principal
auditor),reporting on the financial
information of an entity, uses the work of
another auditor (other auditor) with respect
to the financial information of one or more
branches/components included in F.S.
2. The principal auditor Can rely,
unless there are special cases.
USING THE WORK OF ANOTHER
AUDITOR (ISA 600)
3. Perform audit procedures: When using
such work, the principal auditor should:
a. Advise the other auditor of the use that is
going to be made of the other auditors work.
b. Inform other auditor areas requiring special
consideration, timetable for completion of audit.
c. Advise the other auditor of the significant
accounting , auditing and reporting
requirements and obtain representation as to
compliance with them.
USING THE WORK OF ANOTHER
AUDITOR (ISA 600)
4. Discussion or questionnaire or meet:
The principal auditor may discuss with the
other auditor to answer a questionnaire or may
also meet the other auditor.
5. The principal auditor may discuss with
the other auditor or management affecting
the financial information of the components
6. Supplementary tests: He may also carry
out supplementary tests of the F.S. of the
branch.
USING THE WORK OF ANOTHER
AUDITOR (ISA 600)
7.Documentation:
a. The principal auditor should document in his
working papers the components (Branches) whose
financial statements were audited by other auditors,
the names of the other auditors
b. Procedures performed & conclusions
reached.
c. Qualifications: Where the other auditors report
is qualified, the principal auditor should also
document how he has dealt with the qualifications
or adverse remarks contained in the other auditors
report in framing his own report.
USING THE WORK OF ANOTHER
AUDITOR (ISA 600)
8. Coordination between Auditors:
9.Reporting Considerations:
Qualification of other auditor, Qualified
report Cant use
10.The principal auditor would not be
responsible in respect of the work
entrusted to the other auditors , except in
circumstances which should have aroused
his suspicion about the reliability of the
work performed by the other auditors.
USING THE WORK OF AN AUDITORS
EXPERT
USING THE WORK OF AN AUDITORS
EXPERT
Expert- person or firm possessing special skill,
knowledge and experience in a particular field
other than accounting and auditing. Common
example of experts work include:
Valuation of precious stone, work of arts, real state
and other specialized asset
Determination of amount using specialized
technique like actuarial computation
Interpretation of technical requirements, regulation,
or contracts such as legal document or legal title to
property
PSA 620 identifies 2 kinds of expert
namely:
Managements expert
An expert, whose work in his field of
specialization, is used by entity to assist
the entity in preparing financial
statement
Auditors expert
An expert, whose work in his field of
specialization, is used by the auditor to
assist the auditor in obtaining
sufficient appropriate audit evidence.
Determining the need for an
auditors expert
When determining the need to use the work of
an expert, the auditor would consider
Whether management has used a managements
expert in preparing the financial statement
The nature and significant of the matter, including
its complexity
The risk of material misstatement in the matter
The expected nature of procedure to respond to
identified risks, including the auditors knowledge of
and experience with the work of experts in relation
to such matter; and the availability of alternative
sources of audit evidence
Evaluating the auditors expert

The auditor must:


1. assess the competence and
objectivity of the expert.
The following factor must be considered
when assessing competence
Professional certification or licensing by or
membership in, an appropriate professional body
Experience and reputation in the field in which
the auditor is seeking audit evidence
2. understand the field of the expertise
of auditors expert.
To determine the nature, scope, and
objectives if that experts work; and to
evaluate the adequacy of that work for the
auditors purpose
3. establish the terms of the agreement
with the expert
The auditor and the expert should agree on
the matters such as the nature, scope, and
objectives if that experts work; their duties
and responsibilities, timing of completion;
and the need for the auditor expert to
observe confidentiality requirements. If
appropriate, such agreement has to be in
writing
4. evaluate the result of the work of the
expert
would require consideration of the experts
source of data, assumption and method, and
the result of experts work in light of the
auditors knowledge if the clients business
and the result of other audit procedure
If the auditors expert is not adequate for
the auditors purpose, the auditor should
agree with the expert on the nature and
extent of additional work performed; or the
auditor may perform further audit
procedures appropriate in the circumstances
Effect of the reliance on experts
work on the audit report
The auditor has sole responsibility
for the audit opinion expressed, and
that responsibility is not reduced by
the auditors use of the work of an
expert. Thus, the auditor should not
refer to the work of an auditors
expert in an auditors report
containing an unmodified opinion
Effect of the reliance on experts
work on the audit report
When auditors report contain
modified opinion, the auditor can
make reference to the experts
work if the auditor believes that such
reference is necessary in order for
the readers to understand the reason
for expressing a modified opinion.
When this happen the auditor should
indicate in his report that such
reference does not reduce the
CONSIDERING THE WORK
OF INTERNAL AUDITORS
CONSIDERING THE WORK OF
INTERNAL AUDITORS
Internal auditing is an appraisal
activity established within an entity
as a service to the entity
The external auditor should obtain a
sufficient understanding of the
internal audit activities to assist in
planning the audit and developing an
effective audit approach.
CONSIDERING THE WORK OF
INTERNAL AUDITORS
2 important phases
Making a preliminary assessment of
internal auditing
Evaluating and testing the work of
internal auditing
preliminary assessment of internal
auditing
External auditor should consider the
internal auditors:
competence
Consider the professional qualification and
experience of the internal auditors.
Objectivity
Consider the organizational level to which the
internal auditors report the result of their work
Due professional care
Consider proper planning, supervision and
documentation of internal auditors work
preliminary assessment of internal
auditing
Scope of function
Consider the nature and extent of the
internal auditors assignment
Evaluating and testing the work of
internal auditing
When external auditor decide to use the
work of internal auditor, the external
auditor will have to evaluate and test
the internal auditors work to confirm
its adequacy for the external auditors
purpose
The external auditor may also request
assistance of the internal auditor in
performing routine or mechanical audit
procedure
Evaluating and testing the work of internal auditing

It is important that all judgements


relating to the audit of financial
statement are those of the external
auditor.The auditors responsibility
for audit opinion is not reduced by
any use made of internal auditing
TAPOS NA