In audit, it is not uncommon for management to rely on the work's of expert to assist in preparing the financial statement of the Company. The common work of experts relied by management are as follows:
- engaging external valuer to perform valuation of property ( for impairment assessment of the property)
- engaging corporate finance expert to assist in Purchase Price Allocation review
- engaging actuary to estimate the defined benefit plan of the Company
- engaging corporate finance expert to assist in impairment assessment of goodwill / brand / etc
Generally, management relied on the subject matter expert to provide their opinion on certain aspects.What did we do as an auditor to address this matter?
International Standard of Auditing specifically mention that we need to review and/or evaluate the independence, competency and objectivity of these experts. It is important for us to carry a rigid assessment on the external valuer and its work to ensure that the results is not unreasonable. For instance, we need to check that the valuer is independent from management, such that the opinion provided by expert is independent and not under the influence of management.
When the work performed by subject matter expert become very technical, we may consider to consult our in-house expert (e.g. transaction service department/ valuation team). This is to check that the methodology / work performed by subject matter expert is not unreasonable. The opinion provided by subject matter expert could affect our audit opinion directly. Hence, we urge all auditors to ensure that all mandatory procedures are performed and all factors are consider to deal with this.
- engaging external valuer to perform valuation of property ( for impairment assessment of the property)
- engaging corporate finance expert to assist in Purchase Price Allocation review
- engaging actuary to estimate the defined benefit plan of the Company
- engaging corporate finance expert to assist in impairment assessment of goodwill / brand / etc
Generally, management relied on the subject matter expert to provide their opinion on certain aspects.What did we do as an auditor to address this matter?
International Standard of Auditing specifically mention that we need to review and/or evaluate the independence, competency and objectivity of these experts. It is important for us to carry a rigid assessment on the external valuer and its work to ensure that the results is not unreasonable. For instance, we need to check that the valuer is independent from management, such that the opinion provided by expert is independent and not under the influence of management.
When the work performed by subject matter expert become very technical, we may consider to consult our in-house expert (e.g. transaction service department/ valuation team). This is to check that the methodology / work performed by subject matter expert is not unreasonable. The opinion provided by subject matter expert could affect our audit opinion directly. Hence, we urge all auditors to ensure that all mandatory procedures are performed and all factors are consider to deal with this.
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