Using the Work of Others

Prepared by: Christien Joy Pascual

Using the Work of others
 Using the work of another auditor (PSA 600)
Purpose
The purpose of PSA 600 is to establish standards and
provide guidance when an auditor (Principal Auditor) who is
reporting on the financial statements of an entity, uses the
work of another auditor (other auditor) on financial
information of one or more components (division, branch,
subsidiary, joint venture, associated company) included in
the financial statements of the entity.
 The Principal auditor’s Procedures
The principal auditor documents in working papers the
names of the other auditors, and the:
• components whose financial information was audited by
other auditors;
• their significance in the financial statements of the entity,
as a whole; and
• any conclusions reached regarding individual
components.
Cooperation between Auditors
Reporting Considerations
 Considering the work of the Internal Auditor
(PSA 610)

Internal auditing is an appraisal activity

established within an entity for examining,
evaluating, and monitoring the adequacy and
effectiveness of the accounting and internal control
systems. Certain parts of internal auditing work may
be useful to the external auditor.
 Activities included among the work of the
internal auditor:
• Review of the accounting and internal control systems,
and monitor their operations and recommend
improvements therein
• Examination of financial and operating information,
including the review of the means used to identify,
measure, classify and report such information and specific
inquiry into individual items and detailed testing of
transactions, balances and procedures
 Activities included among the work of the
internal auditor:

• Review of the economy, efficiency and effectiveness of

operatons including nonfinancial controls of an entity
• Review of compliance with laws, regulations and other
external requirements and with policies, directives, and
other internal requirements of management.
Relationship of Internal and External
Auditors
 Using the Work of an Expert/Specialist
(PSA 620)
It deals with the auditor’s responsibilities
regarding the use of an individual or
organization’s work in a field of expertise other
than accounting or auditing, when that work is
used to assist the auditor in obtaining
appropriate audit evidence.
Objective of the auditor
 The work of an expert normally contains
information on the:
• Valuation of certain types of assets, as land, building,
machinery, work of art, precious stones;

• Determination of quantity or physical condition of assets,

as minerals underground or in stock piles, petroleum
reserve, and remaining life of plant and machinery;

• Determination of amounts using specialized techniques

or methods as actuarial valuation;
• Measurement of work completed or to be completed on
contracts in progress; and

• Legal opinion regarding interpretation of agreements,

statutes, and regulations.
 When determining the work of an expert,
the auditor:

Considers the materiality of the financial statement item

being considered;

The risk of misstatement based on the nature and

complexity of the matter being considered;

The quantity and quality of other audit evidence available.

 Competence and objectivity of the expert

• When planning to use the work of an expert, the

auditor should assess the professional competence
of the expert.

• The auditor should assess the objectivity of the

expert.
 Assesing the work of the expert

The auditor assess the appropriateness

of the expert’s work as audit evidence
regarding the financial statement assertion.
Reference to an Expert