In June 2017, the PCAOB proposed amendments to auditing standards setting out requirements when auditors use the work of specialists in an audit. In our comment letter, we support the PCAOB's proposed risk-based approach to the supervision of the work of auditor-engaged and auditor-employed specialists. We also agree that the auditor's responsibilities in relation to the work of a company's specialist should be explicitly addressed in the standards and are supportive of the PCAOB's decision to address this topic by setting out requirements in a new Appendix to AS 1105, Audit Evidence.
However, we believe further clarity is needed as to how this proposal interacts with the PCAOB's separate proposal on auditing accounting estimates. We are concerned that the way the requirements on using the work of a company specialist (whether employed or engaged) in relation to accounting estimates are structured would result in a significant change in practice. Without further clarification, we believe the proposed audit approach would not recognize the practical challenges that can arise when an estimate is developed by a company-engaged specialist.
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