Document ID: chunk:federal_register_of_legislation:F2022C01189:reg:7:p15
Version: federal_register_of_legislation:F2022C01189
Segment Type: reg
Provision Reference: reg 7 (pt 15/21)
Character Range: 50003–53015

extensive, such as corroborating the information to the source's website or published information. In other cases, if a source is not assessed as credible, the auditor may determine that more extensive procedures are appropriate and, in the absence of any alternative independent information source against which to compare, may consider whether performing procedures to obtain information from the external information source, when practical, is appropriate in order to obtain sufficient appropriate audit evidence.

A44.         When the auditor does not have a sufficient basis with which to consider the relevance and reliability of information from an external information source, the auditor may have a limitation on scope if sufficient appropriate audit evidence cannot be obtained through alternative procedures. Any imposed limitation on scope is evaluated in accordance with the requirements of ASA 705.[22]

Reliability of Information Produced by a Management's Expert (Ref: Para. 8)

A45.         The preparation of an entity's financial report may require expertise in a field other than accounting or auditing, such as actuarial calculations, valuations, or engineering data.  The entity may employ or engage experts in these fields to obtain the needed expertise to prepare the financial report.  Failure to do so when such expertise is necessary increases the risks of material misstatement.

A46.         When information to be used as audit evidence has been prepared using the work of a management's expert, the requirement in paragraph 8 applies.  For example, an individual or organisation may possess expertise in the application of models to estimate the fair value of securities for which there is no observable market.  If the individual or organisation applies that expertise in making an estimate which the entity uses in preparing its financial report, the individual or organisation is a management's expert and paragraph 8 applies.  If, on the other hand, that individual or organisation merely provides price data regarding private transactions not otherwise available to the entity which the entity uses in its own estimation methods, such information, if used as audit evidence, is subject to paragraph 7 of this Auditing Standard, being information from an external information source and not the use of a management's expert by the entity.

A47.         The nature, timing and extent of audit procedures in relation to the requirement in paragraph 8, may be affected by such matters as:

           * The nature and complexity of the matter to which the management's expert relates.

           * The risks of material misstatement in the matter.

           * The availability of alternative sources of audit evidence.

           * The nature, scope and objectives of the management's expert's work.

           * Whether the management's expert is employed by the entity, or is a party engaged by it to provide relevant services.

           * The extent to which management