Question
You are carrying out the audit of Josam Construction a quoted company. The company's business includes large civil engineering contracts (the construction of buildings and
You are carrying out the audit of Josam Construction a quoted company. The company's business includes large civil engineering contracts (the construction of buildings and roads). It also owns investment properties which are let to third parties and these comprise offices and industrial buildings. During the year ended 31 March 2019 the company received a substantial claim for damages from Integral Contractors for faults in a building it had constructed. This claim includes the cost of repairs and damages, as the customer alleges that the building cannot be used because of the faults, so alternative accommodation has had to be found. The company has obtained advice on the likely outcome of this claim from a local solicitor. In the year-end financial statements the properties had been revalued by an independent valuer and the work in progress has been valued by an employee of the company who is a qualified valuer.
Required: Describe the matters you would consider and the other evidence you would obtain to enable you to assess the reliability of the work of experts in the following cases:
(a) Legal advice obtained from the local solicitor on the outcome of the claim by Integral Contractors
(b) Valuation of the properties by the independent valuer
(c) Valuation of the work in progress by the internal valuer
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