ExpertHard1 markMultiple Choice
CPA · Question 78 · Area II: Risk Assessment
An auditor is performing an audit of a nonissuer. The auditor is testing the allocation of the purchase price in a business combination. The auditor determines that the valuation of intangible assets requires specialized skills. The auditor decides to use an auditor's specialist. Which of the following is TRUE?
An auditor is performing an audit of a nonissuer. The auditor is testing the allocation of the purchase price in a business combination. The auditor determines that the valuation of intangible assets requires specialized skills. The auditor decides to use an auditor's specialist. Which of the following is TRUE?
Answer options:
A.
The specialist must be independent of the client.
B.
The auditor must evaluate the specialist's competence, capabilities, and objectivity.
C.
The auditor should reference the specialist in the unmodified audit report to show due diligence.
D.
The auditor assumes no responsibility for the specialist's work.
How to approach this question
Using a Specialist: Check their credentials (Competence) and their bias (Objectivity).
Full Answer
B.The auditor must evaluate the specialist's competence, capabilities, and objectivity.✓ Correct
B
AU-C 620 requires the auditor to evaluate the competence, capabilities, and objectivity of the auditor's specialist. While independence is desirable, a lack of independence doesn't strictly prohibit use, but it requires more rigorous evaluation of their work.
Common mistakes
Thinking independence is strictly required (like an auditor). Specialists can be 'objective' without being fully 'independent' in the audit sense, though the distinction is subtle.
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