- 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) factors you will consider when deciding to appoint an auditor’s expert.
(8 marks)
Answer
- Lack of Expertise: Consider appointing an expert if there is a lack of sufficient knowledge or expertise in the specific area being audited that is material to the financial statements.
- Qualification and Competence: Assess the qualifications, competence, and reputation of the expert in the relevant field to ensure their work will meet audit standards.
- Independence and Objectivity: Evaluate the expert’s independence and objectivity, ensuring there is no financial dependence or bias that could affect the reliability of their work.
- Scope of Work: Define the scope of the expert’s work through written instructions covering objectives, specific matters, and intended use of their work to ensure clarity and relevance to the audit.
(2 marks for each factor – 8 marks total)
- Topic: Audit and Assurance Evidence
- Series: NOV 2020
- Uploader: Dotse