In some CPA firms, the most common method of assigning people to accounting and auditing engagements is, out of necessity, to use whoever is available. This may or may not satisfy the requirements of professional standards and it usually doesn’t maximize engagement profitability. Here are two applicable professional standards:
• SQCS No. 7, Human Resources Section—Assign personnel based on the knowledge, skills, and abilities required in the circumstances and the nature and extent of supervision needed.
• SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained—Among the overall responses to address risks of material misstatement at the financial statement are:
1. Assigning staff with higher experience levels or specialized skills.
2. Increasing the level of supervision.
I realize every engagement manager, supervisor or in-charge accountant understands the benefits of assigning the right personnel to engagements. Work gets done faster, less on-the-job training and supervision is required and fewer review notes are necessary. This is what we want, so why don’t we get it? The answer to this question requires more space than I have in this blog but here are a few things to think about.
• The CPA firm is small with a limited number of employees. Training staff personnel, as I’ve discussed in previous blogs, must be a priority. Knowledge possessed by firm leaders must be imparted to engagement personnel to increase their capabilities.
• Assigning personnel to engagements is neither planned nor a priority. While most engagement executives informally consider work assignments on smaller audits, they often are not give priority to those assignments when scheduling conflicts arise. Using scheduling software, and holding periodic scheduling meetings, can facilitate planning staff assignments and eliminate many scheduling conflicts.
• Time wasted by inexperienced or the wrong staff being assigned to engagements, as well as the related increased supervision time, is difficult to quantify. While such time does often result in unbillable time charges, many firm leaders believe the fix will cost more than the problem. Since effective and efficient use of staff resources is a key to maximizing firm profitability, the cost of managing staff scheduling is an investment that can produce large returns.
Post a comment and tell us how you’ve handled personnel assignments.