2070 Use of Experts

Dec-2022

A67. The relevant rules of professional conduct / code of ethics require the professional accountant in public practice to agree to provide only those services that the professional accountant in public practice is competent to perform. The practitioner has sole responsibility for the assurance conclusion expressed, and that responsibility is not reduced by the practitioner’s use of the work of a practitioner’s expert. Nonetheless, if the practitioner using the work of a practitioner’s expert, having followed this CSAE, concludes that the work of that expert is adequate for the practitioner’s purposes, the practitioner may accept that expert’s findings or conclusions in the expert’s field as appropriate evidence.

Practitioner’s Expert (Ref: Para. 36(c)(i))

A69. Some of the assurance work may be performed by a multi‑disciplinary team that includes one or more practitioner’s expert. For example, a practitioner’s expert may be needed to assist the practitioner in obtaining an understanding of the underlying subject matter and other engagement circumstances or in one or more of the matters mentioned in paragraph 51R (in the case of a reasonable assurance engagement) or 51L (in the case of a limited assurance engagement).

A70. When the work of a practitioner’s expert is to be used, it may be appropriate to perform some of the procedures required by paragraph 57 at the engagement acceptance or continuance stage.

Other Practitioners (Ref: Para. 36(c)(ii))

A71. The underlying subject matter may include matters upon which another practitioner may have expressed a conclusion. The practitioner may decide to use the evidence on which that other practitioner’s conclusion is based to provide evidence regarding the underlying subject matter.

A72. The work of another practitioner may be used in relation to, for example, an underlying subject matter at a remote location or in a foreign jurisdiction. Such other practitioners are not part of the engagement team. Relevant considerations when the engagement team plans to use the work of another practitioner may include:

• Whether the other practitioner understands and complies with the ethical requirements that are relevant to the engagement and, in particular, is independent.

• The other practitioner’s professional competence.

• The extent of the engagement team’s involvement in the work of the other practitioner.

• Whether the other practitioner operates in a regulatory environment that actively oversees that practitioner.

A102. Whether a party employed or otherwise engaged by a responsible party is an expert for the purposes of this CSAE is a matter of professional judgment for the practitioner. For example, a responsible party may engage an individual or organization possessing skills and experience not normally possessed by the responsible party. In the practitioner’s judgment, depending on the circumstances of the engagement, this may indicate that the responsible party has used the work of an expert that significantly affects the underlying subject matter and has important implications for the engagement. Paragraph 59 deals with circumstances when information to be used as evidence has been prepared using the work of a responsible party’s expert.

Considerations When a Practitioner’s Expert Is Involved on the Engagement

Nature, Timing and Extent of Procedures (Ref: Para. 57)

A121. The following matters are often relevant when determining the nature, timing and extent of procedures with respect to the work of a practitioner’s expert when some of the assurance work is performed by one or more practitioner’s expert (see paragraph A69):

Integrating the work of a practitioner’s expert

A122. Assurance engagements may be performed on a wide range of underlying subject matters that require specialized skills and knowledge beyond those possessed by the engagement partner and other members of the engagement team and for which the work of a practitioner’s expert is used. In some situations, the practitioner’s expert will be consulted to provide advice on an individual matter, but the greater the importance of the practitioner’s expert’s work in the context of the engagement, the more likely it is that expert will work as part of a multi‑disciplinary team comprising subject matter experts and other assurance personnel. The more that expert’s work is integrated in nature, timing and extent with the overall work effort, the more important effective two‑way communication is between the practitioner’s expert and other assurance personnel. Effective two‑way communication facilitates the proper integration of the expert’s work with the work of others on the engagement.

A123. As noted in paragraph A70, when the work of a practitioner’s expert is to be used, it may be appropriate to perform some of the procedures required by paragraph 57 at the engagement acceptance or continuance stage. This is particularly so when the work of the practitioner’s expert will be fully integrated with the work of other assurance personnel and when the work of the practitioner’s expert is to be used in the early stages of the engagement, for example, during initial planning and risk assessment.

The practitioner’s firm’s quality management policies or procedures

A124. A practitioner’s internal expert may be a partner or staff, including temporary staff, of the practitioner’s firm and, therefore, subject to the firm’s system of quality management, including its policies or procedures in accordance with CSQM 1, or other professional requirements, or requirements in law or regulation, that are at least as demanding as CSQM 1. Alternatively, a practitioner’s internal expert may be a partner or staff, including temporary staff, of a network firm, which may share common quality management policies or procedures with the practitioner’s firm. A practitioner’s external expert is not a member of the engagement team.

A125. Ordinarily, the engagement team may depend on the firm’s system of quality management (see paragraph A64). The extent of dependence will vary with the circumstances, and may affect the nature, timing and extent of the practitioner’s procedures with respect to such matters as:

• Competence and capabilities, through recruitment and training programs.

• The practitioner’s evaluation of the objectivity of the practitioner’s expert. Practitioner’s internal experts are subject to relevant ethical requirements, including those pertaining to independence.

• The practitioner’s evaluation of the adequacy of the practitioner’s expert’s work. For example, the firm’s training programs may provide the practitioner’s internal experts with an appropriate understanding of the interrelationship of their expertise with the evidence gathering process. Depending on such training and other firm processes, such as protocols for scoping the work of the practitioner’s internal experts, may affect the nature, timing and extent of the practitioner’s procedures to evaluate the adequacy of the practitioner’s expert’s work.

• Adherence to regulatory and legal requirements, through the firm’s monitoring and remediation process.

• Agreement with the practitioner’s expert.

Such dependence does not reduce the practitioner’s responsibility to meet the requirements of this CSAE.

The Competence, Capabilities and Objectivity of the Practitioner’s Expert (Ref: Para. 57(a))

A126. Information regarding the competence, capabilities and objectivity of a practitioner’s expert may come from a variety of sources, such as:

• Personal experience with previous work of that expert.

• Discussions with that expert.

• Discussions with other practitioners or others who are familiar with that expert’s work.

• Knowledge of that expert’s qualifications, membership of a professional body or industry association, license to practice, or other forms of external recognition.

• Published papers or books written by that expert.

• The firm’s quality management policies or procedures (see also paragraphs A124‑A125).

A127. While practitioner’s experts do not require the same proficiency as the practitioner in performing all aspects of an assurance engagement, a practitioner’s expert whose work is used may need a sufficient understanding of relevant CSAEs to enable that expert to relate the work assigned to them to the engagement objective.

A128. The evaluation of the significance of threats to objectivity and of whether there is a need for safeguards may depend upon the role of the practitioner’s expert and the importance of the expert’s work in the context of the engagement. There may be some circumstances in which safeguards cannot reduce threats to an acceptable level, for example, if a proposed practitioner’s expert is an individual who has played an important role in assisting the responsible party in making decisions regarding aspects of the underlying subject matter.

A129. When evaluating the objectivity of a practitioner’s external expert, it may be relevant to:

• Inquire of the appropriate party(ies) about any known interests or relationships that the appropriate party(ies) has with the practitioner’s external expert that may affect that expert’s objectivity.

• Discuss with that expert any applicable safeguards, including any professional requirements that apply to that expert, and evaluate whether the safeguards are adequate to reduce threats to an acceptable level. Interests and relationships that it may be relevant to discuss with the practitioner’s expert include:

  • Financial interests.
  • Business and personal relationships.
  • Provision of other services by the expert, including by the organization in the case of an external expert that is an organization.

Obtaining an Understanding of the Field of Expertise of the Practitioner’s Expert (Ref: Para. 57(b))

A130. Having a sufficient understanding of the field of expertise of the practitioner’s expert enables the practitioner to:

A131. Aspects of the practitioner’s expert’s field relevant to the practitioner’s understanding may include:

• Whether that expert’s field has areas of specialty within it that are relevant to the engagement.

• Whether any professional or other standards and regulatory or legal requirements apply.

• What assumptions and methods, including models where applicable, are used by the practitioner’s expert, and whether they are generally accepted within that expert’s field and appropriate in the circumstances of the engagement.

• The nature of internal and external data or information the practitioner’s expert uses.

Agreement with the Practitioner’s Expert (Ref: Para. 57(c))

A132. It may be appropriate for the practitioner’s agreement with the practitioner’s expert to also include matters such as the following:

A133. The matters noted in paragraph A125 may affect the level of detail and formality of the agreement between the practitioner and the practitioner’s expert, including whether it is appropriate that the agreement be in writing. The agreement between the practitioner and a practitioner’s external expert is often in the form of an engagement letter.

Evaluating the Adequacy of the Practitioner’s Expert’s Work (Ref: Para. 57(d))

A134. The following matters may be relevant when evaluating the adequacy of the practitioner’s expert’s work for the practitioner’s purposes:

A135. If the practitioner determines that the work of the practitioner’s expert is not adequate for the practitioner’s purposes, options available to the practitioner include:

Reference to the Practitioner’s Expert in the Assurance Report (Ref: Para. 74)

A184. In some cases, law or regulation may require a reference to the work of a practitioner’s expert in the assurance report, for example, for the purposes of transparency in the public sector. It may also be appropriate in other circumstances, for example, to explain the nature of a modification of the practitioner’s conclusion, or when the work of an expert is integral to findings included in a long form report.

A185. Nonetheless, the practitioner has sole responsibility for the conclusion expressed, and that responsibility is not reduced by the practitioner’s use of the work of a practitioner’s expert. It is important, therefore, that if the assurance report refers to a practitioner’s expert, that the wording of that report does not imply that the practitioner’s responsibility for the conclusion expressed is reduced because of the involvement of that expert.

A186. A generic reference in a long‑form report to the engagement having been conducted by suitably qualified personnel including subject matter experts and assurance specialists is unlikely to be misunderstood as reduced responsibility. The potential for misunderstanding is higher, however, in the case of short‑form reports, where minimum contextual information is able to be presented, or when the practitioner’s expert is referred to by name. Therefore, additional wording may be needed in such cases to prevent the assurance report implying that the practitioner’s responsibility for the conclusion expressed is reduced because of the involvement of the expert.