United States

Amendments: Auditor's use of the work of specialists


Many companies employ or engage specialists, such as actuaries or appraisers, to provide information used in the preparation of financial statements. Auditors often use the work of company specialists as audit evidence. Auditors also employ or engage their own specialists to assist in obtaining and evaluating audit evidence. The Public Company Accounting Oversight Board (PCAOB) recently issued Release No. 2018-006, Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists, which makes the following changes, among others, to existing requirements for use of the work of the company’s specialist:

  • Supplements current requirements in PCAOB Auditing Standard (AS) 1105, Audit Evidence, to address circumstances when the auditor uses the work of a company specialist as audit evidence
  • Aligns requirements for using the work of a company’s specialist with the risk assessment standards and the recently issued auditing standard, Auditing Accounting Estimates, including Fair Value Measurements
  • Sets forth factors for determining the necessary evidence to support the auditor’s conclusion regarding a relevant assertion when using the work of a company's specialist

The standards also makes the following changes, among others, to existing requirements for use of the work of the auditor's specialist:

  • Supplements the requirements for applying the supervisory principles in AS 1201, Supervision of the Audit Engagement, to auditor-employed specialists, and extends those requirements to auditor-engaged specialists
  • Adds requirements for informing the auditor's specialist of the work to be performed and for reviewing and evaluating that specialist's work
  • Amends the requirements for assessing the knowledge, skill and ability of an auditor-engaged specialist
  • Amends the requirements for assessing the objectivity of an auditor-engaged specialist to describe objectivity as the ability to exercise impartial judgment on all issues encompassed by the specialist's work related to the audit
  • Specifies the auditor’s obligations when the specialist or the entity that employs the specialist has a relationship with the company that affects the specialist’s objectivity

Subject to approval by the SEC, the amendments will be effective for audits of financial statements for fiscal years ending on or after December 15, 2020.