An auditor who uses the work of an auditor's external specialist may refer to and identify the specialist in the auditor's report if the Specialist's work provides the auditor greater assurance of reliability. Specialist is management's specialist. Auditor expresses a qualified opinion or an adverse opinion related to the work of the specialist. Auditor indicates a division of responsibility related to the work of the specialist.
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One of the primary ways for an internal auditor to ensure independence and objectivity is to: a. Use any outside resources (consultants/third-party service providers) for the consulting engagement so that corresponding assurance engagements can be performed by personnel within the internal audit function. b. Say nothing and refer the issue to management as they are ultimately responsible for implementing and monitoring adherence to internal controls. It is reasonable for the internal audit function to maintain independence by asking management to confirm that responsibility in writing on individual engagements. c. Let the internal auditors who perform the consulting engagement also perform the assurance engagement in which that area is evaluated. d. Use outside resources (consultants/third-party service providers) who are specialists in the area requesting consulting services for the consulting engagement so that corresponding assurance engagements can be performed by personnel within the internal audit function.
Akash M.
Situation 1: The accounting firm of Aschari and Di Tomaso was engaged to perform an audit of the financial statements of Pammenter Inc. During the audit, Pammenter Inc.'s senior managers refused to give the auditors the information they needed to confirm any of the accounts receivable. As a result, Aschari and Di Tomaso were not able to confirm the accounts receivable balance. However, they did not encounter any other problems during the audit. Situation 2: The accounting firm of Jovanovic and St. Pierre has discovered, during its audit of Robson Chemicals Inc., that the client is being sued for $3 million. Allegedly, one of its products exploded and severely injured a customer. In the firm's discussion with Robson's lawyers, Jovanovic and St. Pierre ascertained that it is very likely that Robson will indeed have to pay this entire amount when the lawsuit is resolved. To provide for this, Robson's chief financial officer has included information relating to the lawsuit in the notes to its financial statements but did not otherwise reflect it in its financial statements. Required: For each of the independent situations presented above: (a) State what type of audit report should be issued and (b) Explain your reasoning.
Brooke B.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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