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Improving Your Audit Process, Part 8: Effective Engagement Leader Involvement

Jun 24th 2016
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The engagement leader (sole practitioner, partner) is the pinnacle of a CPA firm’s quality control system, and ultimate responsibility for planning, performing, and completing an engagement rests with the engagement leader.

In carrying out his or her responsibilities, the leader often acts as a conduit (i.e., passing along instructions, guidance, and information to facilitate the work of engagement personnel).

The more effective the leader is in “passing through” knowledge and wisdom, the more effective and efficient the engagement will be!

Here are some ways this may occur on an audit engagement:

  1. The engagement leader is responsible for delivering and discussing the engagement letter, discussing current economic events, asking questions about fraud, and discussing the planned conduct of the audit with client management personnel. Information obtained should be documented in a memo and passed through to the in-charge accountant prior to planning the engagement.
  2. Information about the client obtained by the leader throughout the year should be passed through to the in-charge accountant during pre-engagement planning.
  3. When the in-charge accountant has completed engagement planning, the leader should lead the planning and brainstorming meeting with engagement personnel to identify risks of material misstatements due to error and fraud, plan the audit strategy, and provide training for staff personnel.
  4. By frequent contact during engagement performance, and by reviewing the engagement in stages, the leader can pass along his or her expertise when it can best prevent wasted time and mistakes.
  5. Completing the engagement review process offers one of the greatest opportunities for the leader to pass through his or her expertise to develop the capabilities of all engagement personnel.

Integrating these auditing and quality control procedures at appropriate times into the chronology of an engagement enables the leader to ensure compliance with quality control and auditing standards and, at the same time, creates the highest level of engagement profitability.

Following is a more detailed, chronological outline for involving engagement leaders on audits that offers major opportunities to improve the audit process. Performing engagement activities and involving the leader at the most appropriate times will maximize both engagement quality and efficiency.

We have provided a link to an illustrative documentation that is titled similar to practice aids provided by major publishers.

Download the PDF here

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