Audits increasingly involve matters that sit outside traditional accounting and auditing expertise: actuarial valuations, complex financial-instrument models, property valuations, environmental obligations, specialised legal interpretation and unusual tax questions. SA 620, Using the Work of an Auditor’s Expert, explains when an auditor may use specialist work and, just as importantly, what the auditor must still do before treating that work as audit evidence.
What is an auditor’s expert under SA 620?
An auditor’s expert is an individual or organisation with expertise in a field other than accounting or auditing whose work is used by the auditor to help obtain sufficient appropriate audit evidence. The expert can be internal to the audit firm or network, or external. This is different from a management’s expert, whose work is used by the entity in preparing its financial statements; management-expert evidence is addressed through SA 500 rather than SA 620.
The distinction matters. If management hires an actuary to calculate an employee-benefit liability, that actuary is management’s expert. If the auditor engages or uses an actuarial specialist to help evaluate that liability, the specialist may be the auditor’s expert.
When should the auditor consider using an expert?
SA 620 requires the auditor to determine whether an expert is needed when expertise outside accounting or auditing is necessary to obtain sufficient appropriate audit evidence. Examples in the standard include valuations of complex financial instruments, land and buildings, plant and machinery, intangible assets and impairment; actuarial calculations; oil and gas reserves; environmental liabilities; interpretation of contracts, laws and regulations; and complex or unusual tax compliance issues.
The decision is not automatic merely because a subject is technical. The auditor considers the nature and significance of the matter, its complexity, risk of material misstatement, the auditor’s own knowledge and experience, whether management has used an expert, and whether adequate alternative audit evidence is available.
The auditor does not outsource responsibility
The most important principle is that using an expert does not reduce the auditor’s responsibility for the audit opinion. SA 620 states that the auditor has sole responsibility for the opinion expressed. The expert contributes specialised evidence; the auditor remains responsible for deciding whether that work is adequate for the audit.
A practical five-step SA 620 workflow
- Define why specialist expertise is needed. Link the proposed expert work to a financial-statement matter, assessed risk and audit objective. Avoid engaging an expert with a vague instruction to “review the valuation.”
- Evaluate competence, capabilities and objectivity. Consider qualifications, relevant specialty, practical experience, professional recognition, available time and resources, and threats created by financial, business or personal relationships. For an external expert, SA 620 specifically requires inquiry about interests and relationships that may threaten objectivity.
- Understand the expert’s field sufficiently. The auditor need not become an actuary, valuer or engineer, but must understand enough to define the nature, scope and objectives of the expert’s work and later evaluate whether that work is adequate.
- Agree the work clearly. SA 620 requires agreement, in writing when appropriate, on the nature, scope and objectives of the work; respective roles and responsibilities; communication arrangements, including the form of any report; and confidentiality requirements.
- Evaluate the work before relying on it. Assess whether the findings are relevant and reasonable and consistent with other audit evidence. Where significant assumptions or methods are used, evaluate their relevance and reasonableness. Where significant source data is used, consider its relevance, completeness and accuracy.
Worked example: actuarial employee-benefit liability
Assume a company has a material defined-benefit obligation calculated by an actuary engaged by management. The audit team concludes that actuarial expertise is needed to assess the measurement. An auditor’s actuarial expert may help evaluate the methodology and key assumptions. The audit file should not simply attach the specialist’s report and mark the balance “verified.”
The auditor should document why specialist involvement was necessary, how the expert’s competence and objectivity were assessed, the agreed scope, and how the expert’s findings were evaluated against the financial statements and other audit evidence. The auditor should also consider the source employee data relevant to the calculation and whether significant assumptions and methods are reasonable in the circumstances.
ICAI’s General Clarification on using the work of an expert illustrates the principle that an auditor should understand the methods used in an actuarial or insurer calculation and judge the appropriateness and reasonableness of relevant assumptions rather than treating an expert certificate as automatically sufficient.
What if the expert’s work is not adequate?
If the auditor concludes that the expert’s work is not adequate for the auditor’s purposes, SA 620 requires the auditor either to agree with the expert on further work or perform additional audit procedures appropriate to the circumstances. A specialist report therefore does not create a safe harbour when its conclusion conflicts with other evidence, relies on questionable assumptions or uses unreliable data.
Can the auditor mention the expert in the audit report?
For an unmodified opinion, SA 620 says the auditor should not refer to the work of an auditor’s expert unless law or regulation requires the reference. If such a reference is required, the report must indicate that it does not reduce the auditor’s responsibility for the opinion. If reference to the expert is relevant to understanding a modified opinion, the same responsibility principle applies.
SA 620 completion checklist
- Is the specialist expertise genuinely outside accounting or auditing?
- Is the expert an auditor’s expert rather than management’s expert?
- Is the reason for using the expert linked to an assessed audit risk or evidence need?
- Have competence, capabilities and objectivity been evaluated?
- For an external expert, have relevant interests and relationships been considered?
- Are scope, roles, communication and confidentiality clearly agreed?
- Has the auditor evaluated findings, assumptions, methods and significant source data?
- Are inconsistencies with other audit evidence resolved?
- If the work is inadequate, has further expert work or additional audit work been performed?
- Does the audit documentation show why the expert’s work was considered adequate?
ICAI’s current Engagement and Quality Control Standards repository lists SA 620 within the 600-series standards on using the work of others and provides the official standard link.
Practical takeaway
An auditor’s expert expands the engagement team’s access to specialised knowledge, but does not transfer the audit judgment or audit opinion. The strongest SA 620 file shows a clear chain: why expertise was needed, why the chosen expert was suitable and objective, what work was agreed, what the expert found, and how the auditor independently concluded that the work was adequate as audit evidence.
