Hermit Galleries PLC are international art dealers with a turnover of £30 million a year.

They specialize in Impressionist paintings and have an inventory valued at £10 million. Recently it has been rumoured that some £4 million worth of their inventory may be the work of a particularly brilliant forger.

Towards the end of the financial year the company have agreed with the auditor to commission a report on the authenticity of the inventory from a well-known academic expert.

Questions:-

1. Draw up the terms of reference for the expert.
2. Draft a checklist to examine the expert’s report as audit evidence.
3. The actual expert’s opinion was certainty on the authenticity of £1.1 million worth, certainty on the forged nature of £1.6 m worth and doubt about the remainder.
4. What should the auditor do?