The use of auditors’ experts by Maltese audit firms

Abstract

Purpose: The purpose of this study is to determine the extent to which Maltese audit firms use auditors’ experts and the nature of such expertise. This research also aims to identify the audit procedures adopted to select an auditor’s expert and evaluate the work performed. Finally, it attempts to analyse the significance of the relationship between an auditor’s expert, auditor, and client. Design: In order to achieve the objectives set for this study, semi-structured interviews were conducted with fifteen leading Maltese audit firms which make use of an auditor’s expert. Findings: The study shows that the rate of an auditor’s expert’s use is increasing, mainly due to enhanced complex business matters. Taxation resulted to be the most popular area of expertise for the use of auditors’ experts. Moreover, local auditors prefer to use internal experts. When selecting an auditor’s expert, the competence of the expert revealed to be the main feature which is taken into consideration by most of the interviewees. Emails are the means of communication mostly used between the expert and the auditor. Meetings are rarely held between the client and the expert. The study determines that most of the interviewees review the expert’s report, however, few of the audit procedures listed in ISA 620 aimed to test the work of an auditor’s expert are applied by local auditors. The use of an expert revealed to have no influence on the audit opinion. Conclusions: New areas of expertise reflect the frequent use of auditors’ experts’, however, management’s experts are alternatively used. Although certain improvements were noticed in the selection and evaluation process, the study concludes that auditors still lack professional scepticism. Auditors apply informal means of communication with internal experts, while a poor relationship exists between the expert and the client. Value: This dissertation sought to improve the use of an auditor’s expert during an audit and to stimulate auditors to comply with ISA 620 during the selection and evaluation process.