- 8 Marks
Question
Future Prospects Company Ltd is a multinational company operating in Ghana. Its core operations include management of pension funds and real estate development. In preparing the financial statements, they carry out an appraisal of the pension funds to assess its ability to pay benefits to contributors. Periodic revaluation of lands and buildings was also carried out.
Required:
Outline FOUR (4) procedures you will follow to determine whether you can place reliance on work performed by an auditor’s expert.
(8 marks)
Answer
- Evaluate the Adequacy of Work: Assess whether the expert’s work is adequate for the purposes of the audit by reviewing the relevance and reasonableness of their findings and conclusions.
- Assess the Expert’s Work in the Financial Statements: Determine if the expert’s findings are properly reflected in the financial statements and if they align with other audit evidence.
- Review the Source Data and Assumptions: Consider the source of data used, the assumptions and methods employed by the expert, and the timing of their work. Evaluate if the assumptions and methods are reasonable and consistent with other audit evidence.
- Analyze the Results of the Expert’s Work: Evaluate the results of the expert’s work in the context of the auditor’s overall knowledge of the business, including checking if the expert’s work is presented in a manner consistent with industry standards and if it includes appropriate consideration of errors or deviations encountered.
(2 marks for each procedure – 8 marks total)
- Tags: Audit Procedures, Auditor’s Assessment, Evaluation, Expert Reliance, Work Quality
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: NOV 2020
- Uploader: Dotse