The Foundation for Audit Documentation

Underpinning the small audit documentation outlined in my last blog, a CPA firm’s operating philosophies can contribute significantly to engagement efficiency. First on the list is the involvement of leadership on engagements.

Involvement on audit engagements for many CPA firm partners or sole proprietors is often limited to a brief meeting with staff personnel before the engagement begins and a review of the working papers and report after the engagement is finished. While this may limit the executive’s time charges on an audit, it also limits the opportunities to train personnel, to set the tone at the top, to ensure audit quality and to deal with engagement problems throughout the job. Limited executive participation usually results in increased time charges during the wrap-up phase to clean up review points and resolve problems after the fieldwork is finished.

Auditing standards now require participation of the top line authority in planning meetings on all audit engagements. Many executives also require in-charge accountants to communicate the status and problems of engagements throughout the performance phase. Some executives perform their engagement reviews in stages to avoid last minute problems. The result of all these practices is that engagement problems are dealt with early and engagement procedures are done correctly the first time! On large or small audits, much wasted time is eliminated and higher profitability is achieved when executives are involved in all phases of engagements.

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by Larry Perry, CPA, CPA Firm Support Services, LLC - Larry has over 40 years experience as a CPA practitioner, author of accounting and auditing manuals, author and presenter of live staff training seminars and author of webcast and self-study CPE programs.  He is co-founder of CPA Firm Support Services, LLC (www.cpafirmsupport.com), an organization providing resources, training and consulting to smaller CPA firms.  Larry writes a weekly blog on AccountingWEB.com focusing on small audits, reviews and compilations.  He is currently developing documentation manuals and handbooks for small audits, reviews and compilations and related electronic practice aids.

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