PSA 210 (Agreeing the Terms of Audit Engagements)

Scope of PSA 210, "Agreeing the Terms of Audit Engagements,"

o provides guidelines for auditors on the conditions for accepting an audit engagement
and ensuring that the terms of the engagement are clearly understood by both the
auditor and the client.
o It focuses on the preconditions for an audit, the contents of the engagement letter, and
situations where the terms of engagement might need to be revised.
What is the objective of the auditor according to PSA 210?
o "The objective of the auditor is to accept or continue an audit engagement only when
the basis upon which it is to be performed has been agreed upon, through:
o (a) Establishing whether the preconditions for an audit are present; and
o (b) Confirming that there is a common understanding between the auditor and
management, and, where appropriate, those charged with governance, of the terms of
the audit engagement" (PSA 210, Paragraph 3).
What are the ‘preconditions for an audit’ as defined in PSA 210?
o "The preconditions for an audit are the use by management of an acceptable financial
reporting framework in the preparation of the financial statements and the agreement
of management and, where appropriate, those charged with governance to the premise
on which an audit is conducted" (PSA 210, Paragraph 6(a)).
According to PSA 210, what should the auditor do if management or those charged with
governance impose a limitation on the scope of the auditor's work?
o "If management or those charged with governance impose a limitation on the scope of
the auditor's work in the terms of a proposed audit engagement such that the auditor
believes the limitation will result in the auditor disclaiming an opinion on the financial
statements, the auditor shall not accept such a limited engagement as an audit
engagement, unless required by law or regulation to do so" (PSA 210, Paragraph 11).
What key matters should be included in the audit engagement letter as per PSA 210?
o "The auditor shall agree on the terms of the audit engagement with management or
those charged with governance, as appropriate. The agreed terms of the audit
engagement shall be recorded in an audit engagement letter or other suitable form of
written agreement and shall include:
 (a) The objective and scope of the audit of the financial statements;
 (b) The responsibilities of the auditor;
 (c) The responsibilities of management;
 (d) Identification of the applicable financial reporting framework for the
preparation of the financial statements; and
 (e) Reference to the expected form and content of any reports to be issued by
the auditor and a statement that there may be circumstances in which a report
may differ from its expected form and content" (PSA 210, Paragraph 10).
When might the terms of an audit engagement need to be revised according to PSA 210?
o "The auditor shall determine whether there is a need to revise the terms of the audit
engagement and whether there is a need to remind the entity of the existing terms of
the audit engagement if there is any indication that management misunderstands the
objective and scope of the audit" (PSA 210, Paragraph 13).
 What are the auditor’s actions if the terms of engagement are not agreed upon?
o "If the auditor is unable to agree to a change in the terms of the audit engagement and
is not permitted by management to continue the original audit engagement, the auditor
shall:
 (a) Withdraw from the audit engagement where possible under applicable law
or regulation; and
 (b) Determine whether there is any obligation, either contractual or otherwise,
to report the circumstances to other parties, such as those charged with
governance, owners, or regulators" (PSA 210, Paragraph 19).
What is required if a revised or new engagement is to be accepted by the auditor?
o "If the auditor is requested to change the engagement to one that provides a lower level
of assurance, the auditor shall determine whether there is a reasonable justification for
doing so. If so, the auditor shall agree on the new terms of the engagement and confirm
them in writing" (PSA 210, Paragraph 17).
How does PSA 210 address the auditor's responsibility when there is no acceptable financial
reporting framework?
o "If the auditor has determined that the financial reporting framework to be applied in
the preparation of the financial statements is unacceptable or that the agreement
referred to in paragraph 6(b) has not been obtained, the auditor shall discuss the matter
with management. Unless required by law or regulation to do so, the auditor shall not
accept the proposed audit engagement" (PSA 210, Paragraph 8).

PSA 300 (Planning an Audit of Financial Statements)

What is the objective of the auditor as stated in PSA 300?
o "The objective of the auditor is to plan the audit so that it will be performed in an
effective manner" (PSA 300, Paragraph 3).
What should the auditor establish according to Paragraph 7 of PSA 300?
o "The auditor shall establish an overall audit strategy that sets the scope, timing, and
direction of the audit, and that guides the development of the audit plan" (PSA 300,
Paragraph 7).
According to PSA 300, what is the purpose of developing an audit plan?
o "The auditor shall develop an audit plan that includes a description of the nature, timing,
and extent of planned risk assessment procedures, as well as further audit procedures at
the assertion level for each material class of transactions, account balance, and
disclosure" (PSA 300, Paragraph 9).
What are the key elements that should be included in the audit strategy as mentioned in
Paragraph 8?
o "The overall audit strategy sets the scope, timing, and direction of the audit, and guides
the development of the audit plan" (PSA 300, Paragraph 8).
How does PSA 300 describe the concept of "engagement team discussion"?
o "The engagement partner and other key members of the engagement team shall discuss
the susceptibility of the entity’s financial statements to material misstatement, and the
application of the applicable financial reporting framework to the entity’s facts and
circumstances" (PSA 300, Paragraph 10).
 What should the auditor do if the audit plan needs to be modified as per Paragraph 12?
o "The auditor shall update and change the overall audit strategy and the audit plan as
necessary during the course of the audit" (PSA 300, Paragraph 12).
According to PSA 300, Paragraph 13, what should the auditor document?
o "The auditor shall document: (a) the overall audit strategy; (b) the audit plan; and (c) any
significant changes made during the audit engagement to the overall audit strategy or
the audit plan, and the reasons for such changes" (PSA 300, Paragraph 13).
What is the role of "preliminary engagement activities" in PSA 300?
o "The auditor shall undertake the following activities at the beginning of the current audit
engagement:
 (a) Performing procedures required by PSA 220, 'Quality Control for an Audit of
Financial Statements,' regarding the continuance of the client relationship and
the specific audit engagement;
 (b) Evaluating compliance with ethical requirements, including independence, as
required by PSA 220; and
 (c) Establishing an understanding of the terms of the engagement, as required
by PSA 210" (PSA 300, Paragraph 6).

PSA 510 (Initial Audit Engagements—Opening Balances)

Scope of PSA 510, "Initial Audit Engagements—Opening Balances"?
o deals with the auditor's responsibilities relating to opening balances when conducting an
initial audit engagement.
What is the objective of the auditor as stated in PSA 510?
o "The objective of the auditor is to obtain sufficient appropriate audit evidence about
whether:
 (a) opening balances contain misstatements that materially affect the current
period’s financial statements; and
 b) appropriate accounting policies reflected in the opening balances have been
consistently applied in the current period’s financial statements, or changes
thereto are appropriately accounted for and adequately presented and disclosed
in accordance with the applicable financial reporting framework" (PSA 510,
Paragraph 3).
According to PSA 510, what should the auditor do if they discover a material misstatement in the
opening balances?
o "If the auditor obtains audit evidence that the opening balances contain a misstatement
that could materially affect the current period's financial statements, the auditor shall
perform such additional audit procedures as are appropriate in the circumstances to
determine the effect on the current period's financial statements" (PSA 510, Paragraph
8).
What procedures should the auditor perform on opening balances as stated in Paragraph 6 of
PSA 510?
o "The auditor shall read the most recent financial statements, if any, and the predecessor
auditor’s report thereon, if any, for information relevant to opening balances, including
disclosures" (PSA 510, Paragraph 6).
 How should the auditor handle significant risks related to opening balances according to PSA
510?
o "If the auditor identifies a risk of material misstatement related to the opening balances
that requires significant audit attention, the auditor shall perform such further audit
procedures as are necessary to address the risk" (PSA 510, Paragraph 7).
What is required if the auditor is unable to obtain sufficient appropriate audit evidence
regarding opening balances?
o "If the auditor is unable to obtain sufficient appropriate audit evidence regarding the
opening balances, the auditor shall express a qualified opinion or a disclaimer of
opinion, as appropriate, in accordance with PSA 705 (Revised)" (PSA 510, Paragraph 10).
What is the auditor required to consider when there is a modification in the predecessor
auditor's opinion?
o "If the prior period’s financial statements were audited by a predecessor auditor and the
predecessor auditor’s opinion was modified, the auditor shall evaluate the effect of the
matter giving rise to the modification in assessing the risks of material misstatement in
the current period’s financial statements in accordance with PSA 315 (Revised)" (PSA
510, Paragraph 5).
How should the auditor address inconsistencies in accounting policies as per PSA 510?
o "The auditor shall evaluate whether the accounting policies reflected in the opening
balances have been consistently applied in the current period’s financial statements, or
changes thereto are appropriately accounted for and adequately presented and
disclosed in accordance with the applicable financial reporting framework" (PSA 510,
Paragraph 9).
What documentation requirements are specified by PSA 510 in relation to opening balances?
o "The auditor shall include in the audit documentation the results of audit procedures
performed on opening balances and the conclusions reached thereon" (PSA 510,
Paragraph 11).

PSA 315 (Identifying and Assessing the Risks of Material Misstatement)

Scope of PSA 315, "Identifying and Assessing the Risks of Material Misstatement,"
o deals with the auditor's responsibility to identify and assess the risks of material
misstatement in the financial statements through understanding the entity and its
environment, including the entity's internal control.
What is the objective of the auditor according to PSA 315?
o "The objective of the auditor is to identify and assess the risks of material misstatement,
whether due to fraud or error, at the financial statement and assertion levels, through
understanding the entity and its environment, including the entity’s internal control,
thereby providing a basis for designing and implementing responses to the assessed
risks of material misstatement" (PSA 315, Paragraph 3).
What should the auditor understand about the entity and its environment as required by PSA
315?
o "The auditor shall obtain an understanding of the following:
 (a) Relevant industry, regulatory, and other external factors;
  (b) The nature of the entity, including its operations, ownership and governance
structures;
 (c) The entity’s selection and application of accounting policies;
 (d) The entity’s objectives and strategies, and those related business risks; and
 (e) The measurement and review of the entity’s financial performance" (PSA
315, Paragraph 11).
What are the components of internal control that the auditor should understand as per PSA
315?
o "The auditor shall obtain an understanding of internal control relevant to the audit,
including the following components: (a) The control environment; (b) The entity’s risk
assessment process; (c) The information system, including the related business
processes, relevant to financial reporting, and communication; (d) Control activities; and
(e) Monitoring of controls" (PSA 315, Paragraph 14).
According to PSA 315, how should the auditor identify and assess the risks of material
misstatement?
o "The auditor shall identify and assess the risks of material misstatement at the financial
statement level, and at the assertion level for classes of transactions, account balances,
and disclosures, to provide a basis for designing and performing further audit
procedures" (PSA 315, Paragraph 25).
What is the importance of ‘significant risks’ in PSA 315?
o "Significant risks are those risks that require special audit consideration. The auditor
shall determine whether any of the risks identified are, in the auditor's judgment, a
significant risk. In exercising this judgment, the auditor shall exclude the effects of
identified controls related to the risk" (PSA 315, Paragraph 27).
What should the auditor do when controls are not effective in addressing a risk of material
misstatement?
o "If the auditor has determined that a risk of material misstatement is a significant risk,
the auditor shall obtain an understanding of the entity’s controls, including control
activities, relevant to that risk" (PSA 315, Paragraph 29).
What are the documentation requirements under PSA 315?
o "The auditor shall include in the audit documentation:
 (a) The discussion among the engagement team;
 (b) Key elements of the understanding obtained regarding each of the aspects of
the entity and its environment;
 (c) The identified and assessed risks of material misstatement at the financial
statement level and at the assertion level; and
 (d) The risks identified, and related controls about which the auditor has
obtained an understanding" (PSA 315, Paragraph 32).
How does PSA 315 define the ‘control environment’?
o "The control environment includes the governance and management functions and the
attitudes, awareness, and actions of those charged with governance and management
concerning the entity’s internal control and its importance in the entity" (PSA 315,
Paragraph A76).
PSA 550 (Related Parties)
Scope of PSA 550, "Related Parties,"
o provides guidance on the auditor's responsibilities regarding related party relationships
and transactions when auditing financial statements.
o It focuses on obtaining an understanding of such relationships and transactions to
identify, assess, and respond to the risks of material misstatement.
What is the objective of the auditor according to PSA 550?
o "The objective of the auditor is to obtain sufficient appropriate audit evidence about
whether related party relationships and transactions have been appropriately identified,
accounted for, and disclosed in the financial statements in accordance with the
applicable financial reporting framework" (PSA 550, Paragraph 9).
According to PSA 550, what is a 'related party'?
o "A related party is a person or other entity that has a relationship with the entity being
audited, as defined in the applicable financial reporting framework" (PSA 550, Paragraph
10(a)).
What specific audit procedures should the auditor perform to identify related parties?
o "The auditor shall inquire of management and others within the entity, review relevant
information, and communicate with those charged with governance to understand the
relationships and transactions with related parties and to identify those that may not
have been identified or disclosed by management" (PSA 550, Paragraph 13).
What should the auditor do if they identify significant related party transactions outside the
entity’s normal course of business?
o "If the auditor identifies significant related party transactions outside the entity's normal
course of business, the auditor shall inspect the underlying contracts or agreements, if
any, and evaluate whether:
 (a) The business rationale (or lack thereof) of the transactions suggests that they
may have been entered into to engage in fraudulent financial reporting or to
conceal misappropriation of assets;
 (b) The terms of the transactions are consistent with management's
explanations; and
 (c) The transactions have been appropriately accounted for and disclosed in
accordance with the applicable financial reporting framework" (PSA 550,
Paragraph 24).
How should the auditor respond to identified risks of material misstatement associated with
related party transactions?
o "The auditor shall design and perform further audit procedures to obtain sufficient
appropriate audit evidence about the assessed risks of material misstatement associated
with related party relationships and transactions" (PSA 550, Paragraph 18).
What is required of the auditor if management has made an assertion that related party
transactions were conducted on terms equivalent to those prevailing in an arm's length
transaction?
o "If management has made an assertion in the financial statements to the effect that a
related party transaction was conducted on terms equivalent to those prevailing in an
 arm's length transaction, the auditor shall obtain sufficient appropriate audit evidence
about the assertion" (PSA 550, Paragraph 26).
What should the auditor do if they become aware of previously unidentified or undisclosed
related parties or related party transactions?
o "If the auditor identifies previously unidentified or undisclosed related parties or
significant related party transactions, the auditor shall
 (a) Communicate the relevant information to the other members of the
engagement team;
 (b) Request management to identify all transactions with the newly identified
related parties for the auditor's further evaluation;
 (c) Inquire why the entity’s controls over related party relationships and
transactions failed to enable the identification or disclosure of the related party
relationships or transactions; and
 (d) Perform appropriate substantive audit procedures relating to such newly
identified related parties or significant related party transactions" (PSA 550,
Paragraph 27).
What documentation is required under PSA 550 regarding related parties?
o "The auditor shall include in the audit documentation the names of the identified
related parties and the nature of the related party relationships" (PSA 550, Paragraph
28).

PSA 600 [Special Considerations—Audits of Group Financial Statements

(Including the Work of Component Auditors)]
Scope of PSA 600, "Special Considerations—Audits of Group Financial Statements (Including the
Work of Component Auditors),"
o provides guidance on how to apply the International Standards on Auditing (ISAs) in the
audit of group financial statements, particularly when the audit involves the work of
component auditors.
What is the objective of the auditor according to PSA 600?
o "The objective of the auditor is to determine whether to act as the auditor of the group
financial statements and, if so, to communicate clearly with component auditors about
the scope and timing of their work on financial information related to components and
to obtain sufficient appropriate audit evidence regarding the financial information of the
components and the consolidation process to express an opinion on whether the group
financial statements are prepared, in all material respects, in accordance with the
applicable financial reporting framework" (PSA 600, Paragraph 8).
What should be included in the group engagement team’s understanding of the group, its
components, and their environments?
o "The group engagement team shall obtain an understanding that is sufficient to:
 (a) Confirm or revise its initial identification of components that are likely to be
significant;
 (b) Confirm or revise its initial assessment of the risks of material misstatement
of the group financial statements; and
  (c) Design and perform further audit procedures to respond to those assessed
risks" (PSA 600, Paragraph 17).
What is a ‘component’ as defined in PSA 600?
o "A component is an entity or business activity for which group or component
management prepares financial information that should be included in the group
financial statements" (PSA 600, Paragraph 9(b)).
What responsibilities does the group engagement partner have regarding the component
auditors?
o "The group engagement partner is responsible for the direction, supervision, and
performance of the group audit engagement in compliance with professional standards
and applicable legal and regulatory requirements and whether the auditor’s report that
is issued is appropriate in the circumstances" (PSA 600, Paragraph 11)
According to PSA 600, what should the group engagement team do if a component auditor does
not cooperate?
o "If a component auditor does not cooperate with the group engagement team or if the
group engagement team has concerns about the quality of the work of a component
auditor, the group engagement team shall determine the nature of further audit
procedures necessary to be performed by the group engagement team, or by another
component auditor, on the financial information of the component" (PSA 600, Paragraph
43).
What are the requirements for the group engagement team when evaluating the adequacy of
the component auditor’s work?
o "The group engagement team shall evaluate the sufficiency and appropriateness of audit
evidence obtained from the component auditors as a basis for the opinion on the group
financial statements" (PSA 600, Paragraph 42).
How should the group engagement team handle a significant component?
o "For a significant component, the group engagement team, or a component auditor,
shall perform an audit of the financial information of the component using component
materiality" (PSA 600, Paragraph 29).
What documentation is required by PSA 600 in relation to the work of component auditors?
o "The group engagement team shall document the following matters:
 (a) An analysis of components, indicating those that are significant, and the type
of work performed on the financial information of the components;
 (b) The nature, timing, and extent of the group engagement team’s involvement
in the work performed by the component auditors on significant components,
including, where applicable, the review of relevant parts of the component
auditors’ audit documentation and conclusions thereon; and
 (c) Written communications between the group engagement team and the
component auditors about the group engagement team’s requirements" (PSA
600, Paragraph 51).

PSA 320 (Materiality in Planning and Performing an Audit)

Scope of PSA 320, "Materiality in Planning and Performing an Audit,"
 o deals with the auditor’s responsibility to apply the concept of materiality in planning and
performing an audit of financial statements.
o It provides guidance on determining materiality for the financial statements as a whole
and for performance materiality.
What is the objective of the auditor according to PSA 320?
o "The objective of the auditor is to apply the concept of materiality appropriately in
planning and performing the audit" (PSA 320, Paragraph 7).
How does PSA 320 define ‘materiality’?
o "Misstatements, including omissions, are considered to be material if they, individually
or in the aggregate, could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements" (PSA 320, Paragraph 2).
What factors should an auditor consider when determining materiality for the financial
statements as a whole?
o "The auditor shall determine materiality for the financial statements as a whole. If, in the
specific circumstances of the entity, there is one or more particular classes of
transactions, account balances, or disclosures for which misstatements of lesser
amounts than materiality for the financial statements as a whole could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial
statements, the auditor shall also determine the materiality level or levels to be applied
to those particular classes of transactions, account balances, or disclosures" (PSA 320,
Paragraph 10).
What is ‘performance materiality,’ and why is it determined?
o "Performance materiality is the amount or amounts set by the auditor at less than
materiality for the financial statements as a whole to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole" (PSA 320, Paragraph 11).
When should the auditor revise materiality?
o "The auditor shall revise materiality for the financial statements as a whole (and, if
applicable, the materiality level or levels for particular classes of transactions, account
balances, or disclosures) in the event of becoming aware of information during the audit
that would have caused the auditor to have determined a different amount (or amounts)
initially" (PSA 320, Paragraph 12).
What does PSA 320 say about the relationship between materiality and audit risk?
o "There is an inverse relationship between materiality and the level of audit risk. The
higher the materiality level, the lower the audit risk, and vice versa" (PSA 320, Paragraph
A1).
According to PSA 320, how does an auditor use materiality in evaluating misstatements?
o "The auditor shall determine whether uncorrected misstatements are material,
individually or in aggregate. In making this determination, the auditor shall consider the
size and nature of the misstatements, both in relation to particular classes of
transactions, account balances, or disclosures and the financial statements as a whole,
and the particular circumstances of their occurrence" (PSA 320, Paragraph A13).
What documentation requirements are specified in PSA 320 regarding materiality?
 o "The auditor shall include in the audit documentation the following amounts and the
factors considered in their determination:
 (a) Materiality for the financial statements as a whole;
 (b) If applicable, the materiality level or levels for particular classes of
transactions, account balances, or disclosures;
 (c) Performance materiality; and
 (d) Any revision of (a)–(c) as the audit progressed" (PSA 320, Paragraph 14).

PSA 610 (Using the Work of Internal Auditors)

Scope of PSA 610, "Using the Work of Internal Auditors,"
o provides guidance on the external auditor's responsibilities when using the work of an
internal audit function.
o It addresses when and how the external auditor can use the work of internal auditors to
obtain audit evidence and the requirements for direct assistance from internal auditors.
What is the objective of the auditor according to PSA 610?
o "The objective of the external auditor, where the entity has an internal audit function
that is relevant to the audit, is to determine whether the work of the internal audit
function can be used, and if so, in which areas and to what extent, and if using the work
of the internal auditors, to determine whether the work is adequate for the purposes of
the audit" (PSA 610, Paragraph 8).
What are the factors that the external auditor should consider when determining whether the
work of the internal audit function can be used?
o "The external auditor shall determine whether the work of the internal audit function
can be used for purposes of the audit by evaluating the following:
 (a) The extent to which the internal audit function’s organizational status and
relevant policies and procedures support the objectivity of the internal auditors;
 (b) The level of competence of the internal audit function; and
 (c) Whether the internal audit function applies a systematic and disciplined
approach, including quality control" (PSA 610, Paragraph 15).
According to PSA 610, what is ‘direct assistance’ by internal auditors?
o "Direct assistance refers to the use of internal auditors to perform audit procedures
under the direction, supervision, and review of the external auditor" (PSA 610,
Paragraph 5(c)).
What are the requirements for the external auditor if they plan to use the work of the internal
audit function?
o "If the external auditor plans to use the work of the internal audit function, the external
auditor shall evaluate:
 (a) The nature and scope of the work performed by the internal audit function;
 (b) The level of competence and objectivity of the internal auditors; and
 (c) Whether the work was performed with due professional care" (PSA 610,
Paragraph 17).
What should the external auditor do if they plan to use internal auditors to provide direct
assistance?
 o "Before using internal auditors to provide direct assistance for purposes of the audit, the
external auditor shall: (a) Obtain written agreement from an authorized representative
of the entity that the internal auditors will be allowed to follow the external auditor’s
instructions, and that the entity will not intervene in the work the internal auditor
performs for the external auditor; and (b) Obtain written agreement from the internal
auditors that they will keep confidential specific matters as instructed by the external
auditor and inform the external auditor of any threat to their objectivity" (PSA 610,
Paragraph 27).
How does PSA 610 describe the external auditor's responsibility for the direction, supervision,
and review of internal auditors providing direct assistance?
o "The external auditor shall direct, supervise, and review the work performed by internal
auditors to provide direct assistance on the engagement in accordance with ISA 220"
(PSA 610, Paragraph 30).
What are the documentation requirements for the external auditor under PSA 610 when using
the work of the internal audit function?
o "The external auditor shall include in the audit documentation:
 (a) The evaluation of the internal audit function’s objectivity, competence, and
application of a systematic and disciplined approach;
 (b) The nature and extent of the work used;
 (c) The audit procedures performed by the external auditor to evaluate the
adequacy of the work used; and
 (d) The basis for the decision regarding the use of direct assistance and the
nature and extent of the work performed by internal auditors" (PSA 610,
Paragraph 37).
What specific threats should the external auditor consider when determining whether internal
auditors can provide direct assistance?
o "The external auditor shall consider the existence and significance of any threats to the
objectivity of the internal auditors, the level of competence of the internal auditors, and
whether such threats create unacceptable risks to the quality of the audit" (PSA 610,
Paragraph A24).

PSA 620 (Using the Work of an Auditor’s Expert)

Scope of PSA 620, “Using the Work of an Auditor’s Expert,”
o provides guidance on the auditor's responsibilities when using the work of an expert
employed or engaged by the auditor to assist in obtaining sufficient appropriate audit
evidence.
o It focuses on determining whether to use the work of an expert, the competence,
capabilities, and objectivity of the expert, and the adequacy of the expert's work for the
audit.
What is the objective of the auditor according to PSA 620?
o "The objective of the auditor is to determine whether to use the work of an auditor’s
expert and, if using the work of an auditor’s expert, to determine whether that work is
adequate for the auditor’s purposes" (PSA 620, Paragraph 6).
What does PSA 620 define as an ‘auditor’s expert’?
 o "An auditor’s expert is an individual or organization possessing expertise in a field other
than accounting or auditing, whose work in that field is used by the auditor to assist the
auditor in obtaining sufficient appropriate audit evidence" (PSA 620, Paragraph 5(a)).
According to PSA 620, what considerations should an auditor make when determining the need
to use an expert’s work?
o "The auditor shall consider:
 (a) The nature and significance of the matter, including its complexity;
 (b) The risks of material misstatement; and
 (c) The availability of alternative sources of audit evidence" (PSA 620, Paragraph
7).
What factors should the auditor evaluate to determine the competence, capabilities, and
objectivity of the auditor’s expert?
o "The auditor shall evaluate whether the auditor’s expert has the necessary competence,
capabilities, and objectivity for the auditor’s purposes, considering factors such as the
expert’s professional qualifications, experience, and reputation in the field" (PSA 620,
Paragraph 9).
What are the key elements that the auditor should agree upon with the auditor’s expert?
o "The auditor shall agree, in writing when appropriate, on the nature, scope, and
objectives of the expert's work, the respective roles and responsibilities of the auditor
and the expert, the nature, timing, and extent of communication, and confidentiality
requirements" (PSA 620, Paragraph 11).
How should the auditor evaluate the adequacy of the auditor’s expert’s work?
o "The auditor shall evaluate the adequacy of the auditor’s expert’s work for the auditor’s
purposes, including the relevance and reasonableness of that work, the expert’s findings
or conclusions, and any significant assumptions and methods used" (PSA 620, Paragraph
12).
What should the auditor do if the auditor’s expert’s work is not adequate?
o "If the auditor concludes that the work of the auditor’s expert is not adequate for the
auditor’s purposes, the auditor shall:
 (a) Agree on the nature and extent of further work to be performed by the
expert; or
 (b) Perform additional audit procedures appropriate to the circumstances" (PSA
620, Paragraph 13).
What documentation is required under PSA 620 when using the work of an auditor’s expert?
o "The auditor shall include in the audit documentation:
 (a) The nature, scope, and objectives of the work performed by the expert;
 (b) The evaluation of the competence, capabilities, and objectivity of the expert;
 (c) The evaluation of the adequacy of the expert’s work; and
 (d) Any agreements reached between the auditor and the expert" (PSA 620,
Paragraph 14).