Using the work of an expert

Client Substantiation File.


An entity may engage the services of an external party (an expert) to provide assistance to determine the actual result of financial and/or non-financial information data for use in the financial statements or performance report. For example a valuer may be engaged to revalue of Land and Buildings or a market research company may complete a survey.

When an entity engages an expert it is important that the management of the entity continues to take ownership of the process as the figures determined by the expert will be included in the annual financial statements. An entity must also ensure that the expert understands the requirements and keeps adequate records of their work. Auditors may have important questions on the process and may need further explanations.

An entity may also need to provide and expert with certain data or reports from their financial management information systems and performance information systems. It is important that management ensures that complete and accurate data and information is provided to the expert when this is going to be used by the expert in performing their work. Management should be able to explain to the auditors what procedures they performed over the information and data that was provided to the expert. The auditor may also perform certain audit procedures on this information and data.

Auditors’ area of focus

Where an entity has engaged an expert, the auditor may use the expert’s work as audit evidence. To complete this piece of work, as outlined in auditing standards, the auditor has to assess and test (where appropriate) the following for the work performed by the expert:

  • Is the expert professionally competent?
  • Is the expert objective?
  • Obtain an understanding of what work the expert has done.
  • Is the scope of work performed by the expert adequate for that piece of work, and in line with applicable New Zealand Generally Accepted Accounting Practice?
  • Assess the appropriateness of the expert’s work, including consideration of:
    • Has the correct source data been used, and is it complete and accurate?
    • Is the methodology appropriate?
    • Are the assumptions used appropriate?
    • Relevance and reasonableness of the findings or conclusions

The auditor will complete this piece of work by requesting some information from the expert. The auditors request would usually ask the expert to confirm:

  • their qualifications and experience;
  • their objectivity;
  • their compliance with relevant professional standards;
  • whether they believe their work is in compliance with New Zealand Generally Accepted Accounting Practice;
  • whether they believe their work is appropriate for inclusion in the annual report;
  • they are aware that auditor will be using their work in forming opinion;
  • copy of the expert’s report; and
  • information regarding assumptions, methods and criteria (if not in report).

In some instances, where an auditor may require further clarification from the expert, the auditor may request to meet with the expert. When an entity engages an expert for financial and/or non-financial information, it is important that the entity explains to the expert that the auditor will be in contact with them.

It is also recommended that the entity advise the auditor early if it plans to engage an expert, this will allow the auditor to discuss with the entity what specific areas the auditor will focus on in relation to the work of the expert.

Page last updated: 18 February 2019