PLANNING, DOCUMENTING AND MONITORING OF TIME AND COSTS

Planning

At the planning stage of an audit, the auditors must prepare time and cost
estimate as part of the audit plan. It is necessary for audits of entities of all
sizes. The objectives of time planning which takes place before the detailed
audit work begins include:
(a) Ensuring that appropriate time is devoted to the different tasks and
activities covering all areas of the audit;
(b) Ensuring that potential problems are identified, and appropriate time
estimate made to cover such matters;
(c) Ensuring proper documentation of time and cost;
(d) Ensuring proper monitoring of time and cost;
(e) Ensuring timely completion and rendering of time sheets;
(f) Ensuring that appropriate fee is charged for the audit; and
(g) Facilitating review.

Planning of time and costs also assist:

(a) In the proper assignment of work to members of the audit team and
their briefing;
(b) In the co-ordination of work done by other auditors and experts, so that
the audit may be performed in an efficient and timely manner; and
(c) In obtaining an understanding of the entity’s affairs and, all members
of the audit team in understanding the nature and scope of other work
they are to carry out before the audit field work starts; within the time
allocated to each aspect of the audit.

Establishment of Policy and Processes

The establishment of time and cost procedures as part of the quality control
policy and processes within a firm involves:
(a) Setting a framework within which all relevant requirements, including
the requirements of time estimating, recording, monitoring and costing,
can be met; and
(b) Determine the size and nature of the practice and its organisation.

Communication

Communication of time and cost policy and processes usually involve:
(a) Communication of time and cost policy and processes to all audit staff
and audit engagement partners for effective implementation; and
(b) Use of internal training, electronic and paper circulars, and staff
manuals to communicate time and cost policy and processes.

Documentation

Appropriate documentation of time and cost policy and processes normally
includes:
(a) A description of the policy and processes and the objectives they are
designed to achieved;
(b) Records of amendments to policies and processes; and
(c) A record of how policy and processes and changes to them have been
communicated.

Assignment of Personnel to Audit Engagements, Time Estimation and

Recording

Each audit engagement should have an engagement partner who should take
responsibility for the engagement on behalf of the firm.
Audit engagement partners are responsible for the conduct of the audits to
which they have been appointed, timely rendering of the bill and collection of
amount billed.
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 record, monitor and render time costs.

Timekeeping

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 efficiently and competently. They are also responsible for
timely billing, rendering and collection of amount billed.

Timekeeping involves:

(a) Knowing the firm’s policy and procedures on time and cost processes;
(b) Knowing the time budget for the tasks and activities assigned;
(c) Timely arrival on assignments;
(d) Keeping daily record of tasks and activities and time expended on them;
(e) Timely completion, approval and submission of timesheets; and
(f) Being educated on appropriate team-working and training.

Monitoring

Firms should appoint a senior audit partner to take responsibility for monitoring
the time aspects of audits carried out by the firm.
The responsibility for monitoring the time aspects of audit performance is
different from the responsibility for the establishment of quality control policy
and processes. Wherever possible, the two responsibilities are undertaken by
different senior audit partners.
The objective of monitoring time and costs is to provide an independent
assessment of:
(a) The appropriateness of the time cost, billing and recovery of costs on
audit; and
(b) Whether the firm’s own time and cost policy and processes have been
applied.
The senior audit partner responsible for the monitoring process:
(a) Develops procedures for the systematic review of time cost, billing and
recovery on completed audit engagements;
(b) Develops appropriate course of action where significant variances
between estimated time cost and actual cost are identified. Courses of
action may involve communication of the findings within the firm and
additional training; and
(c) Ensures changes to the firm’s policies and procedures and disciplinary
action against those who repeatedly fail to comply with the firm’s
standards.

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