AS 1210: Using the Work of an Auditor-Engaged Specialist

An amendment to paragraph .03 has been adopted by the PCAOB and approved by the U.S. Securities and Exchange Commission. The standard as amended will be effective for audits of financial statements for fiscal years ending on or after December 15, 2024. See PCAOB Release No. 2022-002, SEC Release No. 34-95488. View the standard as amended.

Summary Table of Contents

• .01  Introduction
• .02  Objective
• .03  Assessing the Knowledge, Skill, Ability, and Objectivity of the Auditor-Engaged Specialist
• .06  Informing the Auditor-Engaged Specialist of the Work to be Performed
• .09  Evaluating the Work of the Auditor-Engaged Specialist

Introduction

.01       This standard establishes requirements regarding the use of a specialist engaged by the auditor's firm ("auditor-engaged specialist") to assist the auditor in obtaining or evaluating audit evidence with respect to a relevant assertion of a significant account or disclosure.

Note:  For purposes of this standard, a specialist is a person (or firm) possessing special skill or knowledge in a particular field other than accounting or auditing. Because income taxes and information technology are specialized areas of accounting and auditing, this standard does not apply to situations in which a person with specialized skill or knowledge in income taxes or information technology participates in the audit. AS 1201, Supervision of the Audit Engagement, applies in those situations.

Objective

.02       The objective of the auditor is to determine whether the work of the auditor-engaged specialist is suitable for the auditor's purposes and supports the auditor's conclusion regarding the relevant assertion.

Assessing the Knowledge, Skill, Ability, and Objectivity of the Auditor-Engaged Specialist

.03       The engagement partner and, as applicable, other engagement team members performing supervisory activities¹ should assess the specialist's knowledge, skill, and ability in the particular field for the type of work under consideration. This includes obtaining an understanding of the following with respect to the specialist and the entity that employs the specialist:

1. The professional certification, license, or professional accreditation of the specialist in the particular field;
2. The specialist's experience in the type of work under consideration, including applicable areas of specialty within the specialist's field; and
3. The reputation and standing of the specialist in the particular field.

Note:  The auditor's assessment of the specialist's knowledge, skill, and ability affects the auditor's determination of: (1) whether the specialist possesses a sufficient level of knowledge, skill, and ability to perform the type of work under consideration (paragraph .04); and (2) the necessary extent of the review and evaluation of the specialist's work (paragraph .10).

.04       The engagement partner and, as applicable, other engagement team members performing supervisory activities should not use the work of a specialist who does not have a sufficient level of knowledge, skill, and ability.

.05       The engagement partner and, as applicable, other engagement team members performing supervisory activities should assess whether the specialist has the necessary degree of objectivity to exercise impartial judgment on all issues encompassed by the specialist's work related to the audit. This includes evaluating whether the specialist or the entity that employs the specialist has a relationship to the company (e.g., through employment, financial, ownership, or other business relationships, contractual rights, family relationships, or otherwise), or other conflicts of interest relevant to the work to be performed.

Note:  The auditor's assessment of the specialist's objectivity affects the nature and extent of the auditor's procedures to evaluate the data, significant assumptions, and methods that the specialist is responsible for testing, evaluating, or developing.²

Note:  The evidence necessary to assess the specialist's objectivity depends on the significance of the specialist's work and the related risk of material misstatement. Examples of potential sources of information that could be relevant to the auditor's assessment include, but are not limited to:

• Information obtained by the auditor from procedures performed pursuant to AS 2410, Related Parties;
• Engagement contracts between the company and the specialist, or the specialist's employer;
• Responses to questionnaires provided to the specialist regarding relationships between the specialist, or the specialist's employer, and the company;
• Written representations or other information provided by the specialist concerning relationships with the company; and
• Disclosures about relationships with the company in the specialist's report, or equivalent documentation, pursuant to requirements promulgated by the specialist's profession or by legislation or regulation governing the specialist.

Informing the Auditor-Engaged Specialist of the Work to be Performed

.06       The engagement partner and, as applicable, other engagement team members performing supervisory activities should inform the specialist of the work to be performed, which includes establishing and documenting an understanding with the specialist regarding the following:

1. The responsibilities of the specialist, including the objectives of the work to be performed;
2. The nature of the work that the specialist is to perform or assist in performing (for example, testing the company's process used to develop an accounting estimate, including when a company's specialist is involved in developing the estimate, or developing an independent expectation of an estimate);
3. The degree of responsibility of the specialist for:
1. Testing data produced by the company, or evaluating the relevance and reliability of data from sources external to the company; 
2. Evaluating the significant assumptions used by the company or the company's specialist, or developing his or her own assumptions; and
3. Evaluating the methods used by the company or the company's specialist, or using his or her own methods; and
4. The responsibility of the specialist to provide a report, or equivalent documentation, to the engagement partner and, as applicable, other engagement team members performing supervisory activities that describes the work performed, the results of the work, and the findings or conclusions reached by the specialist.

.07       The engagement partner and, as applicable, other engagement team members performing supervisory activities should inform the specialist about matters that could affect the specialist's work. This includes, as applicable, information about the company and its environment, the company's processes for developing the related accounting estimate, the company's use of specialists in developing the estimate, relevant requirements of the applicable financial reporting framework, and possible accounting and auditing issues.

.08       The engagement partner and, as applicable, other engagement team members performing supervisory activities should implement measures to determine that there is a proper coordination of the work of the specialist with the work of relevant engagement team members to achieve a proper evaluation of the evidence obtained in reaching a conclusion about the relevant assertion. This includes:

1. If an auditor's specialist is used to develop (or assist in developing) an independent expectation of an accounting estimate, measures to comply with paragraphs .21–.26 of AS 2501, Auditing Accounting Estimates, Including Fair Value Measurements;
2. If an auditor's specialist is used to test (or assist in testing) the company's process to develop an accounting estimate, measures to comply with AS 2501.09–.18; or
3. If an auditor's specialist is used to evaluate the work of a company's specialist, measures to comply with Appendix A to AS 1105, Audit Evidence, and, for accounting estimates, AS 2501.19.

Evaluating the Work of the Auditor-Engaged Specialist

.09       The engagement partner and, as applicable, other engagement team members performing supervisory activities should review the report, or equivalent documentation, provided by the specialist pursuant to paragraph .06d above and evaluate whether the specialist's work provides sufficient appropriate evidence, specifically whether:

1. The specialist's work and report, or equivalent documentation, are in accordance with the auditor's understanding with the specialist; and
2. The specialist's findings and conclusions are consistent with results of the work performed by the specialist, other evidence obtained by the auditor, and the auditor's understanding of the company and its environment.

.10       The necessary extent of the review depends on: (1) the significance of the specialist's work to the auditor's conclusion regarding the relevant assertion, (2) the risk of material misstatement of the relevant assertion, and (3) the knowledge, skill, and ability of the specialist.

.11       If the specialist or the entity that employs the specialist has a relationship with the company that affects the specialist's objectivity, the auditor should perform additional procedures to evaluate the data, significant assumptions, and methods that the specialist is responsible for testing, evaluating, or developing, pursuant to the engagement team's understanding with the specialist (paragraph .06), or should engage another specialist. The necessary nature and extent of the additional procedures depend on the degree of objectivity of the specialist. As the degree of objectivity increases, the evidence needed from additional procedures decreases. If the specialist has a low degree of objectivity, the auditor should apply the procedures for evaluating the work of a company's specialist.³

.12       If the specialist's findings or conclusions appear to contradict the relevant assertion or the specialist's work does not provide sufficient appropriate evidence, the engagement partner and, as applicable, other engagement team members performing supervisory activities should perform additional procedures, or request the specialist to perform additional procedures, as necessary to address the issue.

Note:  Examples of situations in which additional procedures ordinarily are necessary include: (1) the specialist's work was not performed in accordance with the auditor's instructions; (2) the specialist's report, or equivalent documentation, contains restrictions, disclaimers, or limitations that affect the auditor's use of the report or work; (3) the specialist's findings and conclusions are inconsistent with (i) the results of the work performed by the specialist, (ii) other evidence obtained by the auditor, or (iii) the auditor's understanding of the company and its environment; (4) the specialist lacks a reasonable basis for data or significant assumptions the specialist used; or (5) the methods used by the specialist were not appropriate.