Audit firms warned on specialist reliance

The PCAOB released a staff report on Tuesday, warning auditing firms about the risks of relying on specialists for fair value measurements and accounting estimates. The report highlights the increasing importance of specialists in financial reporting, stating, “If a specialist’s work is not properly overseen or evaluated by the audit firm, there may be a heightened risk that the audit firm’s work will not be sufficient to detect a material misstatement in the financial statements.” The PCAOB also provided observations to help audit firms implement appropriate procedures when using specialists, emphasizing that auditors must evaluate whether the specialist’s work offers sufficient evidence to support financial statement conclusions. Additionally, the PCAOB recently shared a video to assist firms in understanding the new quality control standard, QC 1000.