Definition
An auditor's specialist is a person or firm with expertise in a field other than accounting or auditing, such as actuarial science, valuation or engineering, whose work the auditor uses to help obtain evidence. The specialist may be internal to the audit firm or external. Under AU-C 620 the auditor remains solely responsible for the opinion.
Why it matters in an audit or review
The auditor evaluates the specialist's competence, capabilities and objectivity, agrees on scope and responsibilities, and evaluates the adequacy of the work: relevance of findings, reasonableness of assumptions and methods, and source data. In an unmodified opinion, the auditor does not refer to the specialist's work. Where the specialist is part of the engagement team, the team's direction, supervision and review apply.
Example
A client has a defined benefit pension plan. The audit firm engages an actuary to evaluate the client's actuarial valuation. The auditor reviews the actuary's credentials, defines the scope in writing, obtains the report, compares the discount rate to market yields on high-quality bonds, and tests the census data the actuary used. The pension liability is accepted after a small difference is explained.
Common mistakes
Accepting a specialist's conclusion without testing the data and assumptions behind it.
Sources
- AICPA, AU-C Section 620, Using the Work of an Auditor's Specialist
- AICPA, AU-C Section 500, Audit Evidence
- AICPA, AU-C Section 220 (direction, supervision and review where the specialist is on the engagement team)
- FASB ASC 715-30-35, discount rate assumption (reflects rates on high-quality fixed-income debt)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error