ALLOCATION AND SUPERVISION OF WORK AND RESPONSIBILITIES

Assignment of Personnel to Audit Engagements

Each audit engagement should have an engagement partner who should take
responsibility for the engagement on behalf of the firm. The audit engagement
partner is responsible for the conduct of the audit to which he or she has been
appointed in accordance with ethical and other regulatory requirements, and
for the issue of the auditor’s report on behalf of the firm.
Firms should assign audit staff with the competencies necessary to perform
the audit work expected of them to individual audit engagements.
Firms should establish processes to assess individuals’ knowledge, skills and
abilities.
Firms should develop policies and processes to provide reasonable assurance
that:
(a) Audit engagement partners have the competencies necessary to perform
their roles;
(b) Audit engagement partners’ responsibilities are clearly defined and
communicated to them;
(c) The identity and role of the audit engagement partner is known to the
directors and senior management of the audited entity;
(d) Audit engagement partners have appropriate support (e.g. another
partner), where necessary, at meetings with the directors and senior
management of the audited entity that will involve matters that are, or
may be, material to the auditors’ report; and
(e) Audit engagement partners have sufficient time to discharge their
responsibilities. (Chitty, 2004)
Competencies expected from audit staff will include:
(a) Understanding and practical experience of auditing (through
participation in audit engagements and appropriate training);
(b) Understanding applicable accounting, auditing, ethical and other
technical standards;
(c) Knowledge of specific industries;
(d) Professional judgement; and
(e) Understanding the firm’s quality control policy and processes. (Chitty,
2004).

Direction, Supervision and Review

Audit engagement partners should ensure that audit work is directed, supervised
and reviewed in a manner that provides reasonable assurance that the work
has been performed competently.
Direction of audit staff involves:
(a) Being informed of their responsibilities, the nature of the entity’s
business, accounting or auditing problems that may arise, and the
overall audit plan;
(b) Being encouraged to raise any questions they may have with more
experienced team members;
(c) Understanding the objectives of the work to avoid drawing inappropriate
conclusions as a result of misunderstandings; and
(d) Being educated on appropriate team-working and training.
Supervision is closely related to both direction and review. These include:
(a) Considering the progress of the audit;
(b) Considering whether audit staffs have the competencies necessary to
perform the audit work expected of them and sufficient time to carry out
their work, whether they understand their instructions and whether the
work is being carried out in accordance with the overall audit plan and
audit programme;
(c) Addressing significant accounting and auditing questions raised during
the audit, assessing their significance and modifying the overall audit
plan and audit programme as appropriate;
(d) Identifying matters for further consideration during the audit; and
(e) Work performed by audit staff is reviewed by other more senior audit
staff or the audit engagement partner. Reviewers consider whether:
(i) The work has been performed in accordance with the firm’s
procedures and in accordance with the audit programme;
(ii) The work performed is adequate in the light of results obtained
and has been adequately documented;
(iii) Significant audit matters have been raised for further
consideration;
(iv) Appropriate consultations have taken place and the results of
such consultations have been documented;
(v) The objectives of the audit procedures have been achieved; and
(vi) The conclusions are consistent with the results of the work
performed’ (Chitty, 2004).
Audit engagement partners perform an overall review of working papers. The
review is sufficient for them to be satisfied that the working papers contain
sufficient appropriate evidence to support the conclusions reached and for the
auditors’ report to be issued. The review should cover substantially the working
papers especially in the following areas:
(a) All critical areas of judgement, especially any relating to difficult or
contentious matters identified during the audit;
(b) Audit evidence relating to high risk areas; and
(c) Any other areas which the audit engagement partner considers
important.
Audit engagement partners document the extent of their review and its timing
so as to demonstrate what was completed before the auditors’ report was signed.
Review notes recording questions or points raised in the course of the audit,
need not be retained at the end of the audit provided that, the working papers
have been updated thereto and, in particular, record the reasoning on all
significant matters which require the exercise of judgement.

Individual Responsibilities and the Collective Responsibilities of the
Firm

This covers the following points:
(a) Involvement of all members of an audit team who should feel responsible
for the performance of their work in accordance with professional
standards;
(b) The audit engagement partner has an especially important role in
promoting a quality culture within the audit team; and
(c) The appointment of a suitably senior audit partner within the firm to
take overall responsibility for quality control policy and processes will
assist this process.

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