Describe the steps you would take as an auditor to evaluate the work of an expert, such as a valuation specialist, who has been engaged by the company to estimate the fair value of certain assets.
A core Audit & Assurance interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
To evaluate the work of an expert, I would first review the expert's qualifications and experience in the relevant field. Then, I would assess the methods and assumptions used by the expert in arriving at the fair value estimate, considering whether they are appropriate and consistent with industry standards. Finally, I would evaluate the documentation supporting the estimate and consider whether it is sufficient and appropriate.
WHAT INTERVIEWERS LISTEN FOR
- ✓Review of expert qualifications
- ✓Assessment of methods and assumptions
- ✓Evaluation of documentation
COMMON MISTAKES
- ✗Failure to review qualifications
- ✗Inadequate assessment of methods
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