[The following paragraph was amended, effective for audits of fiscal years beginning on or after December 15, 2010. See PCAOB Release No. 2010-004.

Return to the current version.]


The auditor also should consider the form and content of the documentation that the legal specialist provides and evaluate whether the legal specialist’s findings support management’s assertions with respect to the isolation criterion. Section 336.13 states that “if the auditor determines that the specialist’s findings support the related assertions in the financial statements, he or she reasonably may conclude that sufficient competent evidential matter has been obtained.” FASB Statement No. 140’s requirement regarding reasonable assurance that the transferred assets would be isolated provides the basis for what auditors should consider in evaluating the work of a legal specialist.

[Issue Date: December, 2001.]