Wiley Practitioner's Guide to GAAS 2020. Joanne M. Flood

      The engagement partner is responsible for the direction, supervision, and performance of the engagement in compliance with GAAS, legal and regulatory requirements, and firm policies. The partner is also responsible for the appropriateness of the report, performance of reviews, and that sufficient appropriate evidence has been obtained. (AU-C220.17–.19)

      The auditor with final responsibility for the audit should inform members of the engagement team about:

       Their responsibilities

       The responsibilities of the partners

       The objectives of the procedures they are to perform

       Nature of the entity’s business

       Risk-related issues

       Problems that may arise

       Details of the approach to the engagement

      (AU-C 220.A12)

      Supervision includes:

       Tracking the engagement progress

       Considering the competence of engagement team members

       Addressing significant findings or issues

       Identifying matters for consultation or referral to other team members

      (AU-C 220.A14)

      Engagement Performance

      Reviewing Work

      The engagement partner is responsible for reviews that follow the firm’s policies and procedures. In order to be sure he or she is satisfied that the audit evidence is sufficient and appropriate to support the conclusion, the engagement partner should review the audit documentation and discuss the engagement with the auditor. This should be done on or before the date of the auditor’s report. (AU-C 220.18–.19) It is important that the partner review the documentation and not just rely on staff opinions.

The suitably experienced auditors should review the work of each team member and consider if:

      1 The work was performed in accordance with professional standards and legal and regulatory requirements.

      2 Significant issues were raised and considered.

      3 Consultations, if necessary, took place and were documented.

      4 The nature, timing, and extent of the work were appropriate.

      5 Work performed supports the conclusion and is documented, and the evidence supports the auditor’s report.

      6 Objectives were achieved.

      (AU-C 220.A16)

      The engagement partner’s review should allow time to resolve issues. (AU-C 220.A17)

      Consultation

      The engagement partner is also responsible for ensuring that team members undertake consultation on matters outside their expertise. This consultation may be with other team members, other audit firm staff, or experts outside the firm. The partner must be satisfied with the consultations in terms of nature and scope and that the conclusions are understood and have been implemented. (AU-C 220.20)

      Engagement Quality Control Review

      If the firm requires a quality control review, the engagement partner should determine that a reviewer has been appointed in a timely manner and that the engagement partner discusses with the reviewer any significant findings or issues. The audit report should not be released until the quality control review is completed. (AU-C 220.21)

      As part of the review, the reviewer should:

       Discuss the significant findings with the engagement partner

       Read the financial statements

       Read the draft audit report

       Select and review audit documents related to significant judgments

       Evaluate conclusions

       Consider whether the report is appropriate

      (AU-C 220.22)

      Difference of Opinion

      If differences of opinion arise among firm personnel about accounting or auditing issues in an audit, the engagement team should follow the firm’s policies and procedures. (AU-C 220.23) Procedures to consider may include:

      1 Consultation to attempt resolution

      2 Documentation of an assistant’s disagreement, if he or she wants to be disassociated from the final resolution

      3 Documentation of the basis for the final resolution

Monitoring

      The audit firm must establish a monitoring process. Policies and procedures should provide reasonable assurance that the above elements of quality control are suitably designed and effectively applied. (AU-C 220.24) Monitoring involves:

      1 Relevant and adequate policies and procedures that are complied with by members of the firm

      2 Appropriate guidance and practice aids

      3 Effective professional development activities

      Documentation

      Audit documentation should include:

       Compliance and ethical issues identified

       How those issues were resolved

       Conclusions on independence compliance

       Discussions that support those conclusions

       Conclusions reached regarding the acceptance and continuance of audit engagements

       Nature and scope of consultations undertaken during the course of the audit engagement

       Conclusions resulting from those consultations

      (AU-C 220.25)

      In addition, the engagement quality control reviewer should document:

       That the firm’s engagement quality control procedures were performed

       The date the engagement quality control review was completed

       An affirmation that the reviewer is not aware of any unresolved matters that would cause the reviewer to believe that the judgment and conclusions of the engagement team were inappropriate.

      (AU-C 220.26)

4 AU-C 230 Audit Documentation

       Scope

       Definitions of Terms

       Objective of AU-C Section 230

       Requirements

       Requirement for Audit Documentation

       Form,