YT Ltd had a net worth of INR 1450 crores because of which Ind AS became applicable to them. The company had various derivative contracts – options,…

As per SA 620 “Using the work of an Auditor's Expert", the nature, scope and objectives of the auditor's expert's work may vary considerably with the circumstances, as may the respective roles and responsibilities of the auditor and the auditor's expert, and the nature, timing and extent of communication between the auditor and the auditor's expert. It is therefore required that these matters are agreed between the auditor and the auditor's expert. In certain situations, the need for a detailed agreement in writing is required like - The auditor's expert will have access to sensitive or confidential entity information.The matter to which the auditor's expert's work relates is highly complex.The auditor has not previously used work performed by that expert.The greater the extent of the auditor's expert's work, and its significance in the context of the audit. In the given case, considering the complexity involved in the valuation and volume of derivatives and also due to the fact that the auditor and auditor's expert were new to each other, auditor should have signed a formal agreement/ engagement letter with the auditor's expert in respect of the work assigned to him.