French Commercial code
In forceThe professional practice standard relating to the intervention of an expert, approved by the Minister of Justice, is shown below:
NEP-620. NEP-620 Intervention by an expert
Introduction
01. Pursuant to the provisions of article L. 823-13 of the French Commercial Code and Article 7 of the profession's Code of Ethics, the statutory auditor may call on the services of an expert of his choice when certain controls that are essential to the performance of his duties require expertise in fields other than auditing and accounting.
02. The statutory auditor may also use the work of an expert chosen by the entity.
03. The purpose of this standard is:
-to define the situations in which the statutory auditor may consider it necessary to call in an expert;
-define the principles that the statutory auditor must respect when deciding to call on an expert of his choice;
-define the principles that the statutory auditor respects when it decides to use the work of an expert chosen by the entity.
Definition
04. Expert: a natural or legal person with qualifications and experience in a particular field other than accounting and auditing.
Assessment of the need to call in an expert
05. When obtaining an understanding of the entity and its environment and performing additional audit procedures in response to the risks identified, the statutory auditor may consider it necessary to gather information from the work performed by an expert. This may be the case, in particular, for:
-assessing the value of certain types of assets, such as land and buildings, factories and production tools, works of art or precious stones;
the verification of quantities or the physical condition of certain assets, such as mineral ores in stock and oil reserves;
- the verification of amounts based on different methods of valuation the verification of amounts based on specific methods or techniques, such as the actuarial valuation of pension commitments;
- the assessment of the financial position of certain assets, such as inventories of minerals and oil reserves; and assessing the progress of work carried out or still to be carried out on contracts in progress;
- assessing a specific situation, such as a contract in progress -assessing a complex tax or legal situation;
06. When the statutory auditor considers using the work of an expert as part of his audit assignment, he shall take into account in particular:
-the risk of material misstatement due to the nature, complexity and materiality of the item concerned;
> -the quantity and quality of other information that can be collected;
Principles applicable when the expert is chosen by the statutory auditor
07. The statutory auditor chooses an expert who is independent of the entity.
08. He shall also assess the expert's professional competence in the particular field concerned. The statutory auditor shall in particular take into account:
-the expert's professional qualifications, diplomas or registration on the list of experts approved by a professional body or a court;
-the expert's experience and reputation in the particular field concerned.
Principles applicable where the expert is chosen by the entity
09. Where the expert is chosen by the entity, the statutory auditor:
-ensures that the expert is independent of the entity;
-if applicable, takes note of the instructions that the entity has given in writing to the expert in order to assess whether the nature and scope of the work to be carried out meet the needs of its audit;
-assesses the competence of the expert in accordance with the same principles as those set out in paragraph 08.
10. If the statutory auditor considers that the expert is not independent of the entity, he shall report this to management and request that another expert be called in.
11. If the auditor is not satisfied with the expert's competence, he will inform management and assess whether sufficient and appropriate information can be obtained from the expert's work. The statutory auditor may thus be led to implement additional audit procedures or to call in another expert.
Evaluation of the expert's work
12. The statutory auditor shall collect sufficient and appropriate evidence to establish that:
-the nature and scope of the expert's work comply with the instructions given to him;
-the work carried out by the expert enables him to conclude on compliance with the assertions he wishes to verify. In order to do this, the statutory auditor assesses:
the appropriateness of the sources of information used by the expert;
- the reasonableness of the assumptions and assumptions made by the expert; and -the reasonableness of the assumptions and methods used by the expert and their consistency with those used, where applicable, during previous periods;
-the consistency of the results of the expert's work with his general knowledge of the entity and the results of his other audit procedures.
The statutory auditor also verifies that the expert's conclusions are correctly reflected in the accounts or that they corroborate the assertions underlying the preparation of the accounts.
13. If the results of the expert's work do not provide the statutory auditor with sufficient and appropriate elements or if they are not consistent with the other elements collected:
-he discusses the matter with management at the appropriate level of responsibility and with the expert;
-determining any additional audit procedures to be performed. In this respect, it may decide to use another expert.
Reference to the expert's work in the statutory auditor's report
14. The expert's work is used solely as evidence gathered in support of the statutory auditor's conclusions on his own engagement.
15. The statutory auditor may deem it necessary to refer to the work and conclusions of the expert:
-when justifying his assessments;
-when the expert expresses a reservation, impossibility or refusal to certify, specifying the reasons.
Documentation of the expert's work
16. The statutory auditor shall document in his file the work carried out by the expert that he uses in the context of his engagement.
