Wiley Practitioner's Guide to GAAS 2017. Flood Joanne M.
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Supervision, and Performance
The engagement partner is responsible for the direction, supervision, and performance of the engagement with compliance with GAAS and the appropriateness of the report, performance of reviews, and that sufficient appropriate evidence has been obtained. (AU-C220.17)
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
● Aspects of the entity's business relevant to their assignment
● 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.A13)
Engagement Performance
Reviewing Work
The engagement partners are responsible for the reviews following the firm's policies and procedures. In order to be sure that they are satisfied that the audit audience is sufficient and appropriate to support the conclusion, the engagement partners should review the audit documentation and discuss the engagement with the auditor. Then, this should be done on or before the date of the auditor's report. (AU-C 220.18-19)
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)
Difference of Opinion
If differences of opinion arise among firm personnel about accounting or auditing issues in an audit, there should be:
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
(AU-C 220.A23)
Assignment of Engagement Teams
When evaluating the competence of the engagement team, the engagement partner may consider:
1. Professional standards
2. Regulatory requirements
3. Relevant IT and specialized areas of accounting and auditing
4. The firm's quality control policies and procedures
5. The industry environment
Personnel should have experience in similar engagements through training and participation. Policies and procedures should also provide reasonable assurance that personnel refer to authoritative literature and consult, on a timely basis, with appropriate individuals when dealing with complex, unusual, or unfamiliar issues. (AU-C 220.A10)
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.A32) 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
AU-C 230 AUDIT DOCUMENTATION
AU-C Original Pronouncements
AU-C 230 Definitions of Terms
Source: AU-C 230.06
Audit documentation. The record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached (terms such as working papers or workpapers are also sometimes used).
Audit file. One or more folders or other storage media, in physical or electronic form, containing the records that constitute the audit documentation for a specific engagement.
Documentation completion date. The date, no later than 60 days following the report release date, on which the auditor has assembled for retention a complete and final set of documentation in an audit file.
Experienced auditor. An individual (whether internal or external to the firm) who has practical audit experience and a reasonable understanding of:
1. Audit processes;
2. GAAS and applicable legal and regulatory requirements;
3. The business environment in which the entity operates; and
4. Auditing and financial reporting issues relevant to the entity's industry.
Report release date. The date the auditor grants the entity permission to use the auditor's report in connection with the financial statements.
Objectives of AU-C Section 230
AU-C Section 230.05 states that:
…the objective of the auditor is to prepare documentation that provides
a. a sufficient and appropriate record of the basis for the auditor's report; and
b. evidence that the audit was planned and performed in accordance with GAAS and applicable legal and regulatory requirements.
Requirements
Requirement for Audit Documentation
The auditor must prepare audit documentation, on a timely basis, in sufficient detail to provide a clear understanding of:
● The work performed, including the nature, timing, extent, and results of audit procedures performed;
● The evidence obtained and its source, and the conclusions reached; and
● The fact that the audit was planned and performed in accordance with GAAS and relevant legal and regulatory requirements.
(AU-C 230.02)
The form and content of the audit documentation should be designed for the specific engagement.
Form, Content, and Extent of Audit Documentation
The quantity, type, and content of the audit documentation are based on the auditor's professional judgment and vary with the engagement. Factors to consider in determining the content of audit documentation are discussed in the following paragraphs.
The Audience
The auditor should prepare audit documentation that would allow an experienced auditor8 having