The Public and Audit performance gap


This article is a follow-up to the Monday, 29 May, 2023 edition of this column which focused on the topic “The Public and Audit Expectation Gap.” It came to light clearly that performance gap is one of the components of audit expectation gap flowing from which it reveals that when public trust is lost in audit reports, it further creates credibility problem and erosion of value attached to the profession. In extreme situations, it can undermine political authority with regard to the use of public finances and lead to political instability.

In connection with this article, I find it very necessary to re-emphasize that performance gap focuses on areas where auditors do not do what auditing standards or regulations required of them. Indeed, performance gap can also be attributed to insufficient focus on audit quality or differences in interpretation of auditing standards. So, if the causal agent of performance gap has to do with audit quality or interpretation of standards, what then are the roles of experts in conducting audit exercises? Based on this exploratory question, I will attempt to answer the question by delving into the roles of management’s expert or an auditor’s expert and auditing evidence and establish how seriously they influence audit quality.

Management’s Expert

The International Standards on Auditing (ISA 620) defines Management’s Expert as “an individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the entity (emphasis is mine) to assist the entity in preparing the financial statements.” Clearly, this standard, to my mind, recognises the fact that organisations could lack certain competences or employees with depth of skills necessary to facilitate the preparation of financial statements, hence, they must solicit management’s experts support. In effect, the standard elicits the relevant expertise of individuals or specialties of outsourced entities (third-parties) to assist in preparing the financial statements. The question is whether or not entities really use the services of management’s experts as required, to help improve the quality of audit reports which deficit creates audit performance gap.

Auditor’s Expert

In reference to the International Standards on Auditing (ISA 620), I agree with the elaborate definition of an Auditor’s Expert as “an individual or organization possessing expertise in a field other than accounting or auditing, whose work in that field is used by the auditor to assist the auditor in obtaining sufficient appropriate audit evidence. An auditor’s expert may be either an auditor’s internal expert (who is a partner or staff, including temporary staff, of the auditor’s firm or a network firm), or an auditor’s external expert.” Simply, Auditor’s Expert refers to an independent auditor who can use an expert in his own firm or outside his firm who has expertise in a field other than accounting or auditing to help him obtain “sufficient appropriate audit evidence” for the audit work.

Indeed, it is striking to note that the ISA (620) recognises other professionals or individuals with “expertise” (skills, knowledge and experience in a particular field) “other than” (emphasis mine) accounting or auditing which can help tremendously in preparing financial statements or “obtaining sufficient appropriate audit evidence” necessary to help the independent auditor in the discharge of his statutory (audit) functions. Expertise other than accounting or auditing includes but are not limited to valuations of complex financial instruments or property, actuarial calculation of liabilities or the interpretation of law, contracts, and regulations.

Audit Evidence

Audit(ing) evidence basically refers to the information an auditor collects in the performance of his audit work to determine the accuracy and compliance of a company’s financial statements. The auditing evidence is actually meant to support an organisation’s claims made in the financial statements and their compliance with the relevant accounting standards and regulations. Audit evidence can be bank accounts, management accounts, payrolls, bank statements, invoices, and receipts. But in all considerations, a good auditing evidence should satisfy the requirements of its sufficiency, reliability, provided from an appropriate source, and relevant to the audit at hand.

Inter-relationship of Issues

I will unequivocally say that there is a strong inter-relationship between the works of management’s expert, auditor’s expert and auditing evidence/procedure on audit quality. The competence and capabilities or high quality of the three (3) elements contribute to high audit quality with a closed or narrow audit performance gap. On the other hand, an incompetent management’s expert or auditor’s expert as well as compromised or defective auditing evidence will produce an audit report with high performance gaps. In this vein, to obtain sufficient appropriate audit evidence if expertise in a field other than accounting or auditing is required, an entity must consider the following pointers as provided in ISA 620 in selecting a management’s expert.

Management’s Expert Qualifications


Competence relates to the nature and level of expertise of the management’s expert.


Capability relates the ability of the management’s expert to exercise that competence in the circumstances. Factors that influence capability may include, for example, geographic location, and the availability of time and resources.


Objectivity relates to the possible effects that bias, conflict of interest or the influence of others may have on the professional or business judgment of the management’s expert. The competence, capabilities and objectivity of a management’s expert, and any controls within the entity over that expert’s work, are important factors in relation to the reliability of any information produced by a management’s expert.

What is more, any piece of verifiable information regarding the competence, capabilities and objectivity of a management’s expert may come from a variety of sources, such as:

  • Personal experience with previous work of that expert.
  • Discussions with that expert.
  • Discussions with others who are familiar with that expert’s work.
  • Knowledge of that expert’s qualifications, membership of a professional body or industry association, license to practice, or other forms of external recognition.
  • Published papers or books written by that expert.

Determining the Need for an Auditor’s Expert

Aside from the management’s experts, an auditor’s expert may be needed to assist the independent auditor in one or more of the following:

  • Obtaining an understanding of the entity and its environment, including its internal control.
  • Identifying and assessing the risks of material misstatement.
  • Determining and implementing overall responses to assessed risks at the financial statement level.
  • Designing and performing further audit procedures to respond to assessed risks at the assertion level, comprising tests of controls or substantive procedures.
  • Evaluating the sufficiency and appropriateness of audit evidence obtained in forming an opinion on the financial statements.

To conclude, the combined effects of the people factor (management’s expert, auditor’s expert), their independent of mind and high ethical standards with access to quality information produce an audit report with a reasonable assurance to stakeholders of its compliance with international financial standards and regulations. This means, there will be no performance gap of disdain or material misstatement. It is worthy of note that, despite the significant roles of management’s experts and auditor’s expert, the final audit opinions are the sole preserve and responsibility of the independent auditor.


Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.

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