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1162 Engagement leader review: minimum documentation requirements
The engagement leader is responsible for the reviews performed. Subject to the minimum requirements of Office policy and professional standards being met, the extent of the engagement leader’s review, and evidence of it, is a matter of judgment.
This section explains
- minimum documentation requirements, and
- engagement leader review versus involvement.
CPA Canada Assurance Standards
Performance Audit, Special Examination, and Other Assurance Engagements
CAS 220.17 On or before the date of the auditor's report, the engagement partner shall, through a review of the audit documentation and discussion with the engagement team, be satisfied that sufficient appropriate audit evidence has been obtained to support the conclusions reached and for the auditor's report to be issued. (Ref: Para. A19-A21)
CAS 220.A19 Timely reviews of the following by the engagement partner at appropriate stages during the engagement allow significant matters to be resolved on a timely basis to the engagement partner's satisfaction on or before the date of the auditor's report:
The engagement partner need not review all audit documentation, but may do so. However, as required by CAS 230, the partner documents the extent and timing of the reviews.
CAS 220.A20 An engagement partner taking over an audit during the engagement may apply the review procedures as described in paragraph A18 to review the work performed to the date of a change in order to assume the responsibilities of an engagement partner.
The engagement leader shall take responsibility for reviews being performed, according to Office review policies and procedures. [Nov-2011]
Review and sign-off of engagement documentation by more junior team members shall precede those of more senior team members. [Nov-2011]
On or before the date of the assurance engagement report, the engagement leader shall evidence his or her review (i.e., engagement leader sign-off) of
- critical areas of judgment, especially those relating to complex or contentious matters identified during the engagement;
- evidence obtained and the resulting conclusions relating to areas identified as having high risk (for example, in a direct reporting engagement, evidence obtained and the resulting conclusions reached relating to each of the significant criteria used to evaluate the subject matter);
- resolution of significant issues raised during the engagement; and
- any other matters the practitioner considers significant. [Nov-2011]
Subject to the minimum requirements being met, the extent of the engagement leader’s review, and evidence of it, is a matter of judgment. Engagement leaders consider whether the evidence on file provides a proper account of their involvement in the audit, in particular, at key stages and when significant judgments were made. OAG Audit 3071 provides further guidance on engagement leader review responsibilities.
Planning and reporting/completion sign-offs
In signing off on the planning and reporting/completion steps, and reviewing significant matters and other working papers, the engagement leader confirms that he or she has
- reviewed sufficient documentation in the audit file (electronic and hard copy); and
- held appropriate discussions with the entity, with the team and, where applicable, the quality reviewer.
These sign-offs further demonstrate
- audit objectives have been achieved;
- conclusions are consistent with the work done;
- the engagement has been appropriately executed in accordance with professional standards;
- the engagement leader has taken responsibility for the direction, supervision, and performance of the audit engagement;
- the overall quality of the audit is satisfactory; and
- the evidence obtained is sufficient and appropriate to support the assurance report.
OAG Annual Audit 1021 provides guidance on audit objectives.
OAG Audit 1051 provides guidance on sufficient appropriate audit evidence.
OAG Audit 3071 provides guidance on the review of audit work and documentation.
OAG Annual Audit 4041 provides guidance on planning considerations and sign-offs.
OAG Audit 1171 provides guidance on documentation completion and the final assembly of the audit file.
The engagement leader reviews all significant matters on a timely basis to be satisfied that
- all matters considered significant to the audit have been properly recorded as significant matters;
- there is a proper trail from identification of each significant matter, through evidence obtained, consultation as necessary, to the conclusion (i.e., the documentation of significant matters is sufficient for a reviewer or third party to be able to understand the issue, what audit procedures were performed and evidence obtained, what consultations took place, and how the final conclusion was reached); and
- the documentation of the consulted party’s agreement to that final conclusion is included, if applicable.
OAG Audit 1143 provides further guidance on documenting the review of significant matters.
Quality reviewer guidance
Quality reviewers use the guidance in OAG Audit 3063 for the nature and extent of their review. It will help engagement leaders to be familiar with this guidance as it can both guide them on how to be prepared for the QR review, i.e., to understand better those areas that the QR will review, and remind them of matters that they need to review first and potentially discuss with the QR. See OAG Audit 1163 for further guidance on documenting the QR review.
Engagement leader review versus involvement
There is a difference between evidence of engagement leader review and evidence of his or her involvement in the engagement. Evidence of review is provided to comply with CAS 230 and CSAE 3001, and, therefore, minimum documentation is necessary, as explained in the guidance above. However, evidence of the engagement leader’s involvement in the audit, to satisfy other requirements, may be provided in different ways.
Engagement leaders are responsible for the direction, supervision, and review of the audit work and use professional judgment to decide where their involvement in specific areas is necessary and how they satisfy themselves with the documentation of their involvement. For example, when engagement leaders do not perform detailed review of the working papers but would like to provide evidence of their involvement in the related decision-making process, discussion of specific matters, etc., they may document that they were involved in team discussions on the subject(s) included in the working papers without marking them as reviewed. In certain cases (e.g., lower risk, less complex entities), their involvement in discussion of the matters listed in the planning and reporting/completion sign-off procedure steps in the audit working paper software may be sufficient, and evidence of this will be provided by review of these steps according to Office policies.