Lark Limited reports a material balance of deferred development costs in its current financial statements. The cost relates to the development of a mobile robot that can be used to monitor temperature, humidity, and security in large warehouses. Lark’s auditor obtained an engineers’ report to support the technological feasibility of the robotics project and a market research consultant’s report to determine the selling prices and volumes likely to be achieved over the first ten years that the product is marketed.
Explain the nature of audit evidence obtained in this case. How would this audit evidence affect the auditor’s report? Compare the use of these specialists’ reports in the audit with using the reports of other auditors.