Increasing Audit Profits Series No. 10--Building an Audit "Dream" Team
One of my objectives in writing this blog and presenting webcast and self-study training has always been to help CPA firms build audit “dream" teams. Dream teams are comprised of engagement personnel at all levels that possess the knowledge, skill and experience to plan, perform and complete an audit in accordance with professional standards in minimum time.
With an engagement leader that is involved from the beginning to the end of the engagement providing training and supervision, engagement management and documentation review in stages, the dream team will excel above all competition. No other team will have higher quality; no other team will be faster!
Obviously, a dream team is not built overnight. In addition to a structured continuing education plan that may include live seminars, live and on-demand webcasts and self-study training, the staff resource base of a CPA firm or other organization requires a firm-wide commitment to on-the-job training (OJT). Effective OJT transfers learning from continuing education to engagements. Without application to engagements, learning has little value to a CPA firm or other organization.
Here is an outline of a three-stage OJT program that can build your audit dream team:
Pre-engagement OJT activities:
A pre-engagement “brainstorming” meeting is required by SAS No. 99. Combined with a planning meeting attended by all engagement personnel, this meeting should also serve to familiarize staff persons with the client and with their audit responsibilities. A list of possible meeting subjects includes:
1. Current economic climate or developments affecting the client’s business.
2. Significant changes in the client’s operations, accounting systems, accounting policies and procedures, applicable professional pronouncements, personnel, etc..
3. Concerns or problems encountered in the prior period’s engagement, scope limitations, departures from GAAP and material uncertainties.
4. Last year’s report and management letter.
5. Current year risks of material misstatements due to both error and fraud and planned audit responses.
6. Report requirements and deadlines.
7. Client assistance.
8. Working arrangements and policies at the client’s facility.
9. Individual work responsibilities and budget requirements.
OJT during the Engagement:
The first standard of fieldwork of the AICPA's Ten Generally Accepted Auditing Standards states, in part, "...assistants, if any, are to be properly supervised." Proper supervision, including on-the-job training, should include at least the following considerations:
• Helping the assistant design procedures to resolve engagement problems early.
• Making sure the assistant thoroughly understands the objectives and procedures of an assignment before beginning.
• Helping the assistant to prioritize, organize, and control the approach to assigned work areas.
• Periodically checking on the assistant's progress.
• Keeping the assistant informed of other engagement matters affecting the assigned work area.
• Rotating work assignments and offering the assistant opportunities to work in new areas.
• Motivating the assistant to maximum performance levels and to foster good client relationships.
• Appraising staff performance.
Post-engagement OJT Activities:
To provide staff personnel with the experiences of engagement wrap-up, a post-engagement conference should be held. The conference should include:
• A review of the final draft of the report, financial statements and the internal control communication letter.
• Discussions of engagement problems encountered and their final disposition.
• Discussions of budget variances.
• Identifications of time-saving opportunities for next year.
The Bottom Line:
While the time spent building a dream team may not always be chargeable to clients, the investment in OJT can pay dividends far greater than its cost. Engagement quality and profitability are the end results!
By clicking on the applicable box on the left side of my website home page, www.cpafirmsupport.com, you can download syllabuses and register for the live and on-demand webcasts in my Small Audit Series, including Minimizing Supervision and Review Time which includes more detailed discussions of effective approaches to OJT. Registration for our free email newsletter will also keep you informed of future live webcasts and other small audit materials as they become available.