Acca aaa s21 Notes

September 2021 to June 2022 exams
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3. What the auditor has to do initially
The auditor must be satisfied that the expert:
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Has appropriate qualifications.
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Has the proper experience. Qualification does not necessarily mean that the expert has the 
specific expertise needed. A surveyor could be qualified, but specialise in domestic property and 
that would be no good for the valuation of commercial property.
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Is independent of the client (otherwise the client could pressurise the third party).
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Is professional.
You will appreciate that forming an opinion on the competence of an expert can be difficult and the 
auditor should make enquiries from others who have used the expert, discover whether they have 
used that expert before with satisfactory results and generally try to assess their professional 
reputation.
The work to be performed by the expert has to be clearly defined:
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Its nature, scope and objectives
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The respective responsibilities of the auditor and the third party have to be defined.
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The nature, scope and timing of communications must be set out.
The expert should be required to observe confidentiality. For example, valuable information about a 
company’s worth can be found by looking at the value of its property portfolio. A pension deficit 
implies bad news for the company.
4. Evaluating the adequacy of the expert's work
The auditor cannot verify all the technical calculations or repeat all the work done by the expert 
(otherwise the auditor would have had no need for the expert). However, the auditor must examine 
the expert’s work with respect to:
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Consistency with other evidence. For example, if a property valuer reported a decrease in the 
value of a client’s property portfolio, yet the newspapers were full of news about a property 
boom, the auditor should challenge the valuer’s results.
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Significant assumptions made. For example about the rate of inflation or rate of returns that 
might be earned on pension funds.
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Use and accuracy of source data. To value property the valuer must start with an up-to-date list 
of the properties the company owns. If the right properties are not listed, the valuation will 
certainly be incorrect.
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When the work was carried out to assess if it is still current or out-of-date.