Multiple Choice1.Which of the following statements concerning the auditor`s use of the work of experts is correct?a.If the expert is related to the client, the auditor is not permitted to use the expert`s findings as corroborative evidence.b.The expert may be identified in the auditor`s report only when the auditor issues a qualified opinion.c.The expert should have an understanding of the auditor`s corroborative use of the expert`s findings.d.If the auditor believes thatthe determinations made by the specialist are unreasonable, only an adverse opinion may be issued.College of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City162.An auditor used the services of an expert during the audit of a client's financial statements. When issuing an unmodified auditor's report, the auditor should not mention the expert as this might misled financial statements users.An auditor who uses the work of an expert may refer to and identify the expert in the auditor's report if the auditor expresses a qualified opinion or an adverse opinion related to the work of the expert.a.True, trueb. False, falsec. True, falsed. False, true3.Which of the following persons is not a specialist upon whose work an auditor may rely?a.Actuaryb.Appraiserc.Internal Auditord.Engineers 4.During the audit, the auditor may need the assurance of an expert in obtaining sufficient appropriate evidence. A common example is a.Evaluating the integrity of management.b.Determination of the amounts using actuarial computations.c.Evaluating the potential financial statement effect of an employee fraud.d.Determining the sufficiency and appropriateness of evidential matter obtained.5.When determining the need to use the work of an expert, the auditor would consider the following, excepta.The quantity and quality of other audit evidence available.b.The materiality of the financial statement item being considered.c.The risk of misstatement based on the nature and complexity of the matter being considered.d.The professional certification or licensing by, or membership in, an appropriate professional body.6.The risk that an expert's objectivity will be impaired increases when the expert is related in some other manner to the entity (for example, be being financially dependent upon or having an investment in the entity) and when the expert isa.Employed by the auditor.b.Employed by the entity.c.Engaged by the auditor.d.Engaged by the entity.7.The following statements relate to the auditor's use of the work of an expert:i.The auditor should assess the appropriateness of the expert's work as audit evidence regarding the financial statement assertion being considered.ii.If the results of the expert's work do not provide sufficient appropriate audit evidence or it the results are not consistent with other audit evidence, the auditor should resolve the matter.College of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City17iii.When issuing an unmodified auditor's report, the auditor should not refer to the work of an expert.a.Only i is truec. only iii is true.b.Only ii is trued. All of the statements are true.8.PSA 620 (Revised and Redrafted), using the Work of an Auditor's Expert, deals with a.The auditor's use of the work of a management's expert.b.The auditor's responsibilities regarding the use of an individual or organization's work in a field of expertise other than accounting or auditing, when that work is used to assist the auditor in obtaining sufficient appropriate audit evidence.c.Situations where the engagement team includes a member with expertise in a specialized area of accounting or auditing.d.How the auditor's responsibility for the opinion on the entity's financial statements will be divided between the auditor and the auditor's expert.9.PSA 620 considers the following individuals as "experts", excepta.An individual with expertise in applying methods of accounting for deferred income tax.b.An expert in taxation law.c.An individual with expertise in complex modeling for the purpose of valuing financial instruments.d.An individual with expertise in the valuation of assets acquired and liabilities assumed in business combinations.10.In using the work of an expert, an auditor referred to the expert's findings in the auditor's report. This is an appropriate reporting practice if thea.Auditor, as a result of the expert's work, decides to indicate a division of responsibility with the expert.b.Expert is aware that his/her work will be used to evaluate the assertions in the financial statements.c.Auditor, as a result of the expert's work, issues a modified auditor's report.d.Auditor, as a result of the expert's work,adds an emphasis-of-matter paragraph in his/her unmodified auditor's report.11.Expertise in a field other than accounting or auditing may include expertise in relation to the following, except:a.Applying methods of accounting for deferred income tax.b.Estimating oil and gas reserves.c.Interpreting contracts, laws, and regulations.d.Valuation of environmental liabilities and site clean-up costs.12.Which of the following is not an auditor's expert upon whose work an auditor may rely?a.Actuaryb.Engineerc.Appraiserd.Internal auditorCollege of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City1813.If the results of the auditor's expert's work do not provide sufficient appropriate audit or evidence or are not consistent with other audit evidence, the auditor should a.Report the matter to the appropriate regulatory agency of the government b.Resolve the matterc.Withdraw from the engagementd.Express an unqualified opinion with reference to the work of the expert14.When issuing an unmodified auditor's report, the auditor a.May refer to the work of an auditor's expertb.Should refer to the work of an auditor's expert to indicate a division of responsibilityc.Should include in the auditor's report the identity of the auditor's expert and the extent of the expert's involvementd.Should not refer to the auditor's work15.PSA 620 (Using the Work of an Expert) provides guidance on using the work of an expert as audit evidence. According to this standard, an expert may bea.Contracted by the auditor but never by the entityb.Contracted by the entity but never by the auditorc.Contracted but not employed by the entityd.Contracted or employed by the entity or auditor