Proposal: Auditor's use of the work of specialists
FINANCIAL REPORTING INSIGHTS |
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. 2017-003, Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists, which, if finalized, would amend two existing standards—Auditing Standard (AS) 1105, Audit Evidence, and AS 1201, Supervision of the Audit Engagement—and replace and retitle AS 1210, Using the Work of a Specialist.
The proposal would make the following changes, among others, to existing requirements for use of the work of the company’s specialist:
- Supplement current requirements in AS 1105 to address circumstances when the auditor uses the work of a company specialist as audit evidence
- Align requirements with those in the recently issued proposed auditing standard, Auditing Accounting Estimates, including Fair Value Measurements, and Proposed Amendments to PCAOB Auditing Standards
- Remove from the scope of AS 1210 requirements for using the work of a company's specialist as audit evidence
The proposal would make the following changes, among others, to existing requirements for use of the work of the auditor's specialist:
- Enhance the requirements for applying a risk-based supervisory approach to auditor-employed specialists, and extend those requirements to auditor-engaged specialists
- Add requirements for informing the auditor's specialist of the work to be performed and for reviewing and evaluating that specialist's work
- Amend the requirements for assessing the knowledge, skill and ability of an auditor's specialist
- Amend 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 in the audit
The proposal is available for comment until August 30, 2017.