Auditors warned not to rely too heavily on specialists

The SEC and the PCAOB both warned auditors not to place too much reliance on specialists hired for their expertise speaking at the National Association of State Boards of Accountancy’s auditing conference.

The SEC’s Associate Chief Accountant, Marc Panucci, noted that executives often use specialists when a company lacks internal experts who can measure fair value. Panucci cautioned, however, the specialists need to be competent and able to understand the facts, circumstances, and assumptions, and use the appropriate models. Without a thorough understanding of fair value, Panucci suggested that management could consider consulting legal counsel.

“The standard we have addresses the use of a management specialist and a specialist the auditor might engage,” PCAOB Chief Auditor Martin Baumann said. “We think there are differences, and we intend to probably break those out into two separate standards.”

“We have found in our inspections that too often auditors just take the findings of the specialists and use that work as acceptable evidence and not appropriately evaluate the work of the specialists or evaluate the credentials and independence of the specialists,” Baumann noted.

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