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3062 Engagement Leader Responsibilities for Audit Quality
Jun-2021

Overview

This section summarizes an engagement leader’s responsibilities for audit quality.

Topics include the following:

  • Overall audit quality
  • Engagement quality control review
  • Acceptance and continuance
  • Assignment of engagement teams
  • Ethical requirements
  • Independence
  • Direction, supervision, and performance of the assurance engagement
  • Reviews
  • Consultations
  • Differences of opinion
  • Consideration of the results of monitoring

CPA Canada Assurance Standards

Office

Annual Audit

Performance Audit, Special Examination, and Other Assurance Engagements

CAS 220.8 The engagement partner shall take responsibility for the overall quality on each audit engagement to which that partner is assigned. (Ref: Para. A3)

Leadership Responsibilities for Quality on Audits (Ref: Para. 8)

CAS 220.A3 The actions of the engagement partner and appropriate messages to the other members of the engagement team, in taking responsibility for the overall quality on each audit engagement, emphasize:

(a) The importance to audit quality of:

(i) Performing work that complies with professional standards and applicable legal and regulatory requirements;

(ii) Complying with the firm’s quality control policies and procedures as applicable;

(iii) Issuing auditor’s reports that are appropriate in the circumstances; and

(iv) The engagement team’s ability to raise concerns without fear of reprisals; and

(b) The fact that quality is essential in performing audit engagements.

Responsibilities of the Engagement Partner

CSAE 3001.37 The engagement partner shall take responsibility for the overall quality on the engagement.

Engagement Quality Control Review

CAS 220.19 For audits of financial statements of listed entities, and those other audit engagements, if any, for which the firm has determined that an engagement quality control review is required, the engagement partner shall:

(a) Determine that an engagement quality control reviewer has been appointed;

(b) Discuss significant matters arising during the audit engagement, including those identified during the engagement quality control review, with the engagement quality control reviewer; and

(c) Not date the auditor’s report until the completion of the engagement quality control review. (Ref: Para. A24-A26)

Nature, Timing and Extent of Engagement Quality Control Review (Ref: Para. 20)

CAS 220.A27 - Remaining alert for changes in circumstances allows the engagement partner to identify situations in which an engagement quality control review is necessary, even though at the start of the engagement, such a review was not required.

Engagement Quality Control Review

CSAE 3001.40 For those engagements, if any, for which a quality control review is required by law or regulation or for which the firm has determined that an engagement quality control review is required:

(a) The engagement partner shall take responsibility for discussing significant matters arising during the engagement with the engagement quality control reviewer, and not date the assurance report until completion of that review; and

Acceptance and Continuance of Client Relationships and Audit Engagements

CAS 220.12 The engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed, and shall determine that conclusions reached in this regard are appropriate. (Ref: Para. A8-A10)

CAS 220.13 If the engagement partner obtains information that would have caused the firm to decline the audit engagement had that information been available earlier, the engagement partner shall communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action. (Ref: Para. A10)

Responsibilities of the Engagement Partner

CSAE 3001.37 The engagement partner shall take responsibility for the overall quality on the engagement. This includes responsibility for:

(a) Appropriate procedures being performed regarding the acceptance and continuance of client relationships and engagements;

CSAE 3001.A68. CSQC 1 requires the firm to establish policies and procedures for the acceptance and continuance of client relationships and specific engagements, designed to provide the firm with reasonable assurance that it will only undertake or continue relationships and engagements where the firm is competent to perform the engagement and has the capabilities, including time and resources, to do so.

Assignment of Engagement Teams

CAS 220.14 The engagement partner shall be satisfied that the engagement team, and any auditor’s experts who are not part of the engagement team, collectively have the appropriate competence and capabilities to:

a) Perform the audit engagement in accordance with professional standards and applicable legal and regulatory requirements, and

b) Enable an auditor’s report that is appropriate in the circumstances to be issued. (Ref: Para. A11-A13)

Assignment of Engagement Teams (Ref: Para. 14)

CAS 220.A11 An engagement team includes a person using expertise in a specialized area of accounting or auditing, whether engaged or employed by the firm, if any, who performs audit procedures on the engagement. However, a person with such expertise is not a member of the engagement team if that person’s involvement with the engagement is only consultation. Consultations are addressed in paragraphs 18, A22 and A23.

CAS 220.A12 When considering the appropriate competence and capabilities expected of the engagement team as a whole, the engagement partner may take into consideration such matters as the team’s:

  • Understanding of, and practical experience with, audit engagements of a similar nature and complexity through appropriate training and participation.
  • Understanding of professional standards and applicable legal and regulatory requirements.
  • Technical expertise, including expertise with relevant information technology and specialized areas of accounting or auditing.
  • Knowledge of relevant industries in which the entity operates.
  • Ability to apply professional judgment.
  • Understanding of the firm’s quality control policies and procedures.

Considerations Specific to Public Sector Entities

CAS 220.A13 In the public sector, additional appropriate competence may include skills that are necessary to discharge the terms of the audit mandate in a particular jurisdiction. Such competence may include an understanding of the applicable reporting arrangements, including reporting to the legislature or other governing body or in the public interest. The wider scope of a public sector audit may include, for example, some aspects of performance auditing or a comprehensive assessment of compliance with law, regulation or other authority and preventing and detecting fraud and corruption.

Assignment of the Team

CSAE 3001.36 The engagement partner shall: (Ref: Para. A68)

(a) Be satisfied that those persons who are to perform the engagement collectively have the appropriate competence and capabilities to:

(i) Perform the engagement in accordance with relevant standards and applicable legal and regulatory requirements; and

(ii) Enable an assurance report that is appropriate in the circumstances to be issued.

CSAE 3001.57 When the work of a practitioner’s expert is to be used, the practitioner shall also: (Ref: Para. A121-A125)

(a) Evaluate whether the practitioner’s expert has the necessary competence, capabilities and objectivity for the practitioner’s purposes. In the case of a practitioner’s external expert, the evaluation of objectivity shall include inquiry regarding interests and relationships that may create a threat to that expert’s objectivity; (Ref: Para. A126-A129)

Relevant Ethical Requirements

CAS 220.9 Throughout the audit engagement, the engagement partner shall remain alert, through observation and making inquiries as necessary, for evidence breaches of relevant ethical requirements by members of the engagement team. (Ref: Para. CA4-A5)

CAS 220.10 If matters come to the engagement partner’s attention through the firm’s system of quality control or otherwise that indicate that members of the engagement team have breached relevant ethical requirements, the engagement partner, in consultation with others in the firm, shall determine the appropriate action. (Ref: Para, A5)

CSAE 3001.38 Throughout the engagement, the engagement partner shall remain alert, through observation and making inquiries as necessary, for evidence of breaches of relevant ethical requirements by members of the engagement team. If matters come to the engagement partner’s attention through the firm’s system of quality control or otherwise that indicate that members of the engagement team have breached relevant ethical requirements, the engagement partner, in consultation with others in the firm, shall determine the appropriate action.

Independence

CAS 220.C11 The engagement partner shall form a conclusion on compliance with independence requirements that apply to the audit engagement. In doing so, the engagement partner shall: (Ref: Para. A5)

C(a) Obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate circumstances and relationships that create threats to independence [In ISA 220, this paragraph states: Obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate threats to independence];

(b) Evaluate information on identified breaches, if any, of the firm’s independence policies and procedures to determine whether they create a threat to independence for the audit engagement; and

C(c) Take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the audit engagement, where withdrawal is possible under applicable law or regulation. The engagement partner shall promptly report to the firm any inability to resolve the matter for appropriate action. [In ISA 220, this paragraph states: (c) Evaluate whether the identified threats are at an acceptable level; and (d) Take appropriate action to address the threats that are not at an acceptable level by eliminating the circumstances that create the threats, applying safeguards to reduce threats to an acceptable level, or withdrawing from the engagement, where withdrawal is possible under applicable law or regulation. The engagement partner shall promptly report to the firm any inability to resolve the matter for appropriate action.] (Ref: Para. CA6-A7).

CSAE 3001.24 The practitioner shall accept or continue a direct engagement only when: (Ref: Para. A31-A34)

(a) The practitioner has no reason to believe that relevant ethical requirements, including independence, will not be satisfied;

Supervision (Ref: Para 32(b))

CSQC 1.A34 Engagement supervision includes the following:

  • Tracking the progress of the engagement;
  • Considering the competence and capabilities of individual members of the engagement team, whether they have sufficient time to carry out their work, whether they understand their instructions and whether the work is being carried out in accordance with the planned approach to the engagement;
  • Addressing significant matters arising during the engagement, considering their significance and modifying the planned approach appropriately; and
  • Identifying matters for consultation or consideration by more experienced engagement team members during the engagement.

Direction, Supervision and Performance

CAS 220.15 The engagement partner shall take responsibility for:

(a) The direction, supervision and performance of the audit engagement in compliance with professional standards and applicable legal and regulatory requirements; and (Ref: Para. A14-A16, A21)

(b) The auditor’s report being appropriate in the circumstances.

Direction, Supervision and Performance (Ref: Para. 15(a))

CAS 220.A14 Direction of the engagement team involves informing the members of the engagement team of matters such as:

  • Their responsibilities, including the need to comply with relevant ethical requirements, and to plan and perform an audit with professional skepticism as required by CAS 200.
  • Responsibilities of respective partners where more than one partner is involved in the conduct of an audit engagement.
  • The objectives of the work to be performed.
  • The nature of the entity’s business.
  • Risk-related issues.
  • Problems that may arise.
  • The detailed approach to the performance of the engagement.

Discussion among members of the engagement team allows less experienced team members to raise questions with more experienced team members so that appropriate communication can occur within the engagement team.

CAS 220.A15 Appropriate teamwork and training assist less experienced members of the engagement team to clearly understand the objectives of the assigned work.

CAS 220.A16 Supervision includes matters such as:

  • Tracking the progress of the audit engagement.
  • Considering the competence and capabilities of individual members of the engagement team, including whether they have sufficient time to carry out their work, whether they understand their instructions and whether the work is being carried out in accordance with the planned approach to the audit engagement.
  • Addressing significant matters arising during the audit engagement, considering their significance and modifying the planned approach appropriately.
  • Identifying matters for consultation or consideration by more experienced engagement team members during the audit engagement.

Responsibilities of the Engagement Partner

CSAE 3001.37 The engagement partner shall take responsibility for the overall quality on the engagement. This includes responsibility for:

(b) The engagement being planned and performed (including appropriate direction and supervision) to comply with professional standards and applicable legal and regulatory requirements;

(c) Reviews being performed in accordance with the firm’s review policies and procedures, and reviewing the engagement documentation on or before the date of the assurance report; (Ref: Para. A73)

(d) Appropriate engagement documentation being maintained to provide evidence of achievement of the practitioner’s objectives, and that the engagement was performed in accordance with relevant CSAEs and relevant legal and regulatory requirements; and

Review (Ref: Para. 32(c))

CSQC 1.A35 A review consists of consideration of whether:

  • The work has been performed in accordance with professional standards and applicable legal and regulatory requirements;
  • Significant matters have been raised for further consideration;
  • Appropriate consultations have taken place and the resulting conclusions have been documented and implemented;
  • There is a need to revise the nature, timing and extent of work performed;
  • The work performed supports the conclusions reached and is appropriately documented;
  • The evidence obtained is sufficient and appropriate to support the report; and
  • The objectives of the engagement procedures have been achieved.

Reviews

CAS 220.16 The engagement partner shall take responsibility for reviews being performed in accordance with the firm’s review policies and procedures. (Ref: Para. A17-A18, A21)

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)

The Engagement Partner’s Review of Work Performed (Ref: Para. 17)

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:

  • Critical areas of judgment, especially those relating to difficult or contentious matters identified during the course of the engagement;
  • Significant risks; and
  • Other areas the engagement partner considers important.

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.

CSAE 3001.37 The engagement partner shall take responsibility for the overall quality on the engagement. This includes responsibility for:

(c) Reviews being performed in accordance with the firm’s review policies and procedures, and reviewing the engagement documentation on or before the date of the assurance report; (Ref: Para. A73)

CSAE 3001.A73 Under CSQC 1, the firm’s review responsibility policies and procedures are determined on the basis that the work of less experienced team members is reviewed by more experienced team members.

Consultation

CAS 220.18 The engagement partner shall:

(a) Take responsibility for the engagement team undertaking appropriate consultation on difficult or contentious matters;

(b) Be satisfied that members of the engagement team have undertaken appropriate consultation during the course of the engagement, both within the engagement team and between the engagement team and others at the appropriate level within or outside the firm;

(c) Be satisfied that the nature and scope of, and conclusions resulting from, such consultations are agreed with the party consulted; and

(d) Determine that conclusions resulting from such consultations have been implemented. (Ref: Para. A22-A23)

CSAE 3001.37 The engagement partner shall take responsibility for the overall quality on the engagement. This includes responsibility for:

(e) Appropriate consultation being undertaken by the engagement team on difficult or contentious matters.

Differences of Opinion

CAS 220.22 If differences of opinion arise within the engagement team, with those consulted or, where applicable, between the engagement partner and the engagement quality control reviewer, the engagement team shall follow the firm’s policies and procedures for dealing with and resolving differences of opinion.

Monitoring

CAS 220.23 An effective system of quality control includes a monitoring process designed to provide the firm with reasonable assurance that its policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively. The engagement partner shall consider the results of the firm’s monitoring process as evidenced in the latest information circulated by the firm and, if applicable, other network firms and whether deficiencies noted in that information may affect the audit engagement. (Ref: Para. A34-A36)

Monitoring (Ref: Para. 23)

CAS 220.A34 CSQC 1 requires the firm to establish a monitoring process designed to provide it with reasonable assurance that the policies and procedures relating to the system of quality control are relevant, adequate and operating effectively.

CAS 220.A35 In considering deficiencies that may affect the audit engagement, the engagement partner may have regard to measures the firm took to rectify the situation that the engagement partner considers are sufficient in the context of that audit.

CAS 220.A36 A deficiency in the firm’s system of quality control does not necessarily indicate that a particular audit engagement was not performed in accordance with professional standards and applicable legal and regulatory requirements, or that the auditor’s report was not appropriate.

CSAE 3001.39 The engagement partner shall consider the results of the firm’s monitoring process as evidenced in the latest information circulated by the firm and, if applicable, other network firms and whether deficiencies noted in that information may affect the assurance engagement.

OAG Policy

Overall audit quality

The responsibilities of the engagement partner or practitioner shall normally be discharged by the audit principal, who is the engagement leader for all engagements, whether or not the Auditor General has delegated his or her signing authority for the auditor’s reports or special examination reports under Section 18 of the Auditor General Act. [Nov-2015]

In cases where an individual below the level of Principal is assigned to the role of engagement leader, it shall be formally approved by the Auditor General and appropriately documented. [Nov-2015]

The engagement leader shall ensure that audits are carried out in compliance with Office policies, professional standards, and the Office’s system of quality control. [Nov-2011]

In those circumstances where an engagement leader is not assigned to the engagement, an assistant auditor general of the applicable audit practice shall assume the role of engagement leader. [Sep-2015]

Engagement quality control review

Where a quality reviewer has not been appointed. Whether or not professional standards or Office policy require appointment of a quality reviewer, on more complex engagements or where circumstances change, the engagement leader shall consider if one ought to be appointed. [Nov-2011]

Where a quality reviewer is appointed. For all assurance engagements where an engagement quality control review is assigned, the engagement leader is required to

  • determine that a quality reviewer has been appointed;

  • ensure that all significant matters, including identified risks and significant judgments arising during the assurance engagement, are discussed with the quality reviewer;

  • ensure that the report is not dated until completion of the engagement quality control review; and

  • ensure that the engagement quality control review is appropriately documented. [Nov-2011]

Acceptance and continuance

The engagement leader shall review on a timely basis the results of any initial engagement acceptance and continuance procedures that were required to be performed according to OAG Audit 3011 and determine whether the required procedures performed and conclusions reached in this regard were appropriate and documented. [Nov-2011]

If information is subsequently obtained that would have changed the Office’s or engagement leader’s decision on acceptance/continuance had it been known at the time of that decision, the engagement leader shall notify the assistant auditors general of the applicable audit practice and apply the policies set out in OAG Audit 3011 so that the Office and engagement leader may determine and take the appropriate action. [Sep-2015]

Assignment of engagement teams

The engagement leader shall ensure that the audit team has the necessary competencies, capabilities, resources, and time to perform the assurance engagement in accordance with professional standards and regulatory and legal requirements, and to enable the issuance of an assurance engagement report that is appropriate in the circumstances. [Nov-2011]

The engagement leader shall determine if a specialist is required based on the complexity of the areas audited and the audit team’s skills to carry out the work, and document his or her conclusion and rationale in related planning procedures. [Nov-2011]

Before the completion of the planning/survey phase of an assurance engagement, the engagement leader shall

  • assess the engagement team to be satisfied that the engagement team, including specialists and any auditor’s/practitioner’s experts who are not part of the engagement team, has the appropriate competence and capabilities; and

  • assign roles and responsibilities. [Sep-2015]

The engagement leader shall ensure that each member of the audit team has an understanding of professional standards appropriate to his or her role on the team. [Nov-2011]

Ethical requirements

The engagement leader shall

  • throughout the audit engagement, remain alert through observation and making inquiries as necessary, for evidence of breaches of relevant ethical requirements by members of the engagement team;

  • take appropriate action to eliminate or reduce threats to relevant ethical requirements to an acceptable level by applying safeguards; and

  • evaluate information on identified breaches to relevant ethical requirements and determine the impact of the breach on the assurance engagement. [Jun-2021]

Independence

The engagement leader shall

  • form a conclusion on compliance with independence requirements that apply to the assurance engagement,

  • take appropriate action to eliminate or reduce threats to independence to an acceptable level by applying safeguards, and

  • evaluate information on identified breaches and determine the impact of the breach on the assurance engagement. [Nov-2011]

Direction, supervision, and performance of the assurance engagement

The engagement leader shall ensure proper supervision of the engagement team members. [Nov-2011]

Reviews

The engagement leader shall ensure that detailed file reviews are conducted on a timely basis at appropriate stages during the engagement and before the date of the assurance engagement report. [Nov-2011]

As a minimum, the engagement leader shall review and be satisfied with the matters and documentation specified in audit working paper software’s minimum sign off steps of the engagement leader, significant matters, and other working papers that, in the engagement leader’s judgment, are important and appropriate to review. [Jun-2020]

Consideration of the results of monitoring

The engagement leader shall consider the results of the Office’s monitoring process, as indicated in the latest information circulated by the Office, and whether deficiencies noted in that information may affect the audit engagement. [Nov-2011]

OAG Guidance

Overall audit quality

The responsibilities of the engagement partner, as defined by assurance standards, shall normally be discharged by the audit principal, who is referred to as the engagement leader in OAG methodology. While ensuring that audits are carried out in compliance with Office policies, professional standards, and the Office’s system of quality control, the engagement leader also recognizes that when acting as the signatory on annual audits, he or she signs on behalf of the Auditor General of Canada and is therefore accountable in his or her actions and decisions to the Office and the Auditor General.

For greater clarity, even in circumstances where the auditor’s report, special examination report, or chapter is to be signed by an assistant auditor general, or the Auditor General, the engagement leader shall retain the accountabilities and responsibilities of the engagement partner, as set out in Canadian Auditing Standards and other assurance standards.

While engagement leaders sometimes delegate certain tasks to other members of the engagement team, they may not delegate the accountabilities and responsibilities of their role. Where the engagement leader has delegated performance of a particular task that he or she normally performs, the engagement leader is sufficiently involved in and takes responsibility for satisfactory completion of the task. The engagement leader provides evidence of this involvement by marking the tasks as reviewed. For clarity, it may be necessary to document the assignment of delegated tasks in the engagement file.

CAS 220–Quality Control for an Audit of Financial Statements is the quality control standard for financial audits. An engagement leader assigned to an audit of financial statements should become familiar with the requirements of this standard and the related policies and procedures developed to support the Office’s system of quality control and compliance with these requirements.

CSAE 3001–Direct Engagements is the assurance standard for performance audits and special examinations. An engagement leader assigned to a performance audit or special examination should become familiar with the requirements of this standard and the related policies and procedures developed to support the Office’s system of quality control and compliance with these requirements.

OAG Audit 1012 Audit quality, including roles and responsibilities for audit quality, provides further guidance on the assignment of roles and responsibilities for audit quality.

The engagement leader should exercise caution when considering delegations of tasks that he or she normally performs in higher risk engagements or engagements where a quality reviewer has been assigned.

Engagement leaders are expected to ensure that they manage resources provided to them effectively and efficiently in conducting their audits. The engagement leader

  • leads the performance of the audit and its documentation by being proactively and sufficiently involved throughout the audit, including being satisfied that risks have been assessed and responded to appropriately;

  • exhibits leadership in continuous quality improvement and challenges engagement team members to think, analyze, question, and be rigorous in their approach and communicate regularly;

  • demonstrates a willingness to teach and coach others;

  • identifies that a quality reviewer has been assigned and ensures that person’s sufficient and timely involvement (i.e., sufficiently early in the audit process to allow for significant matters identified to be promptly resolved);

  • budgets for the estimated time that the quality reviewer assessed would be necessary for the quality reviewer’s review;

  • discusses significant matters arising during the audit, including those identified during the quality reviewer’s review, where applicable, with the quality reviewer;

  • is responsible for the engagement team undertaking appropriate consultation on difficult or contentious matters and initiating those consultations where necessary (OAG Audit 3081);

  • has ongoing involvement in assessing the progress of the audit and in making key judgments;

  • is satisfied that the review, supervision, and quality control procedures in place are adequate and effective;

  • has overall responsibility for reviewing and assessing the quality of the work done, its proper and timely documentation, and the conclusions reached (OAG Audit 3071); and

  • documents the extent and timing of his or her own involvement or is satisfied that an appropriate record of his or her involvement exists.

Engagement quality control review

The engagement leader remains alert for changes in circumstances to identify situations in which an engagement quality control review is necessary, even though, at the start of the engagement, such a review was not required.

Where a quality reviewer has not been appointed and the engagement leader concludes one ought to be, the engagement leader consults with the assistant auditor general of Audit Services.

Considering the results of the OAG’s monitoring of the System of Quality Control

OAG Audit 1012 provides guidance on the assignment of roles and responsibilities for audit quality and the OAG’s monitoring process.

Acceptance and continuance of client relationships and audit engagements

The engagement leader, with appropriate consultation where necessary, recommends the decision to accept or continue/discontinue an assurance engagement according to OAG Audit 3011.

See also OAG Annual Audit 3040 for guidance concerning engagement letters.

Assignment of engagement teams

Before the completion of the planning or survey phase of the assurance engagement, the engagement leader ensures that the audit team has the necessary competencies and capabilities to perform the assurance engagement. Depending on the circumstances (and the application of other OAG policies), other members of an engagement team may include a quality reviewer, IT Audit specialists, data analytics specialists, and tax and/or other specialists.

When using Office specialists, the engagement leader may have personal knowledge of, and experience with, the specialist’s work providing them with assurance concerning the specialist’s expertise and competence. In the absence of personal knowledge or experience, the engagement leader may presume the Office specialist has the appropriate competence for the engagement by virtue of their appointment as an internal specialist. However, the engagement leader must remain alert to any indications that the specialist may not possess the necessary competence for the engagement and where necessary, take steps to ensure the engagement team has the appropriate competence.

Engagement leaders are encouraged to complete this assessment as early as practicable in the audit planning/survey phase to identify possible resource concerns at an early stage of the engagement.

The engagement leader should also be satisfied that

  • the planned resources have, in fact, been allocated to the team and the team members have sufficient time to perform the work expected of them;

  • there is a clear designation of roles, and responsibilities and tasks have been assigned appropriately; and

  • the tasks to be performed, including the reporting lines for reviewing and reporting to the engagement leader, are clearly defined, communicated, and documented.

The engagement leader takes into account the experience of the team when determining the degree of supervision and review required.

The engagement leader is proactively involved in assessing team capabilities and performance throughout the audit and takes appropriate action when he or she becomes aware that additional resources or expertise is required. When the engagement leader delegates these tasks, he or she nonetheless remains accountable.

Teams and Relationships. Where possible, the engagement leader provides a development opportunity for team members by providing them with the scope to learn new skills. The new skills learned on one engagement will benefit not only the individual, but also future engagements the team member may work on.

Ethical requirements

OAG Audit 1031 provides guidance applicable to the engagement leader concerning ethical requirements.

Independence

The engagement leader takes appropriate action to eliminate or reduce threats to independence to an acceptable level by applying the framework for assessing threats to independence.

The framework requires the Office and its employees to

  • identify threats to compliance with independence requirements;
  • assess the significance of the threats identified;
  • apply safeguards, when necessary, to eliminate or reduce the threat to an acceptable level; and
  • document the threat and how safeguards eliminate or reduce it to an acceptable level.

OAG Audit 3031 provides guidance applicable to the engagement leader concerning independence.

See also OAG Audit 3063 Quality reviewer responsibilities, OAG Audit 3081 Consultations, and OAG Annual Audit 2210 Communications with those charged with governance.

Direction, supervision, and performance of the assurance engagement

The engagement leader is sufficiently involved in the planning phase, including team meetings, to

  • assess whether the team has the appropriate competence and capabilities, resources, and time to perform the audit engagement, and whether the involvement of specialists and experts is appropriately planned;

  • assess the engagement team’s compliance with ethical requirements;

  • share understanding of the entity and its environment, risks, and controls;

  • lead the discussion on fraud (as required); and

  • share with the team his or her experience and insight, enhancing the effectiveness and efficiency of the planning process.

The engagement leader leads the development of the audit strategy and plan, including, where appropriate, holding initial meetings with senior client executives during the planning phase. The engagement leader also chairs the mandatory team planning meeting with the engagement team.

The engagement leader is satisfied with the following:

  • Overall and performance materiality levels, as well as materiality for particular items and the de minimis SUM posting level (where appropriate), have been discussed among the engagement team members, agreed upon, and documented.

  • Significant risks have been appropriately identified and the rationale documented.

  • Planned responses to assessed risks, including the nature, timing, and extent of audit procedures for material account balances, systems, and practices or matters of significance to the scope of the audit, have been appropriately identified and documented.

  • Appropriate planning activities have been performed and documented, including the dissemination of audit instructions in the case of group audits.

  • Sign offs to provide evidence of satisfaction with the planning process have been provided.

The engagement leader takes responsibility for the implementation of the audit plan, and reviews any significant matters identified during the planning stage.

During the audit, the engagement leader

  • participates sufficiently in monitoring the progress of the audit to be satisfied with the engagement’s overall quality and that matters requiring judgment are being appropriately identified and resolved;

  • leads the discussions and decides on whether sufficient appropriate audit evidence has been obtained or whether there is a need to revise the nature, timing, and extent of work performed;

  • is satisfied that appropriate consultations have taken place and the resulting conclusions have been documented, the documentation agreed with the person consulted, and the conclusions have been implemented;

  • is satisfied that the objectives of the engagement procedures have been achieved and have been reviewed by an appropriate level of staff; and

  • reviews the completion activities and signs off to provide evidence of satisfaction with the work done to support the opinion or conclusion.

Teams and Relationships. Spending time with the engagement team while performing the above tasks provides the opportunity for the team members to interact with and learn from the engagement leader. These interactions with the team allow the engagement leader to coach the team on expected behaviours and provide examples and recognition of individual and team performance.

Reviews

The engagement leader reviews the audit process, not only the recorded results of work done, to be satisfied that

  • the right matters have been considered; and

  • the audit work has been appropriately designed and executed to address the risks identified, and to provide sufficient appropriate audit evidence.

In addition to the engagement leader’s review of significant matters, as contemplated in CAS 220.A18 and CSAE 3001.40 a), the engagement leader

  • reviews other working papers, which in his or her professional judgment are important in the particular circumstances of the engagement; and

  • is satisfied that an appropriate level of review of all work and documentation has been performed by the engagement team.

Review of audit work when there is a change in engagement leader during the audit

OAG Audit 1162 provides guidance applicable to the engagement leader concerning the review of audit work when there is a change in engagement leader during the audit.

Consultations

The engagement leader is responsible for making the judgments necessary to successfully carry out the audit engagement. He or she determines the prudent action to take on accounting, auditing, and reporting matters that arise during the course of the engagement; checks that matters are resolved according to the OAG’s position on the matter; communicates the position to the entity; and determines the appropriate report to issue. The engagement leader is also responsible for checking that the appropriate expertise is brought to bear on all matters related to the engagement. Engagement leaders consult with others, as appropriate, before making a commitment to the entity on matters that may be controversial; on important judgments about the acceptability of the entity’s accounting policies, practices, and disclosures; or on the scope of the work or the form of the report.

The engagement leader

  • needs to be satisfied that the engagement team has consulted appropriately (including when there is a requirement under Office policy to consult);

  • consults appropriately with the quality reviewer (where applicable) and others. Note, however, that where the nature and extent of the consultations with the quality reviewer become significant, the engagement team and the quality reviewer must take care to maintain the quality reviewer’s objectivity. OAG Audit 3063 provides specific guidance on the extent of consultations with the quality reviewer.

Engagement leaders initiate consultations with the appropriate persons.

OAG Audit 3081 provides guidance on consultations.

Differences of opinion

Where differences of opinion arise within the engagement team, with those consulted, and, where applicable, between the engagement leader and the quality reviewer, the Office’s policies and procedures for dealing with and resolving differences of opinion are followed.

The engagement leader informs members of the engagement team that they may bring matters involving differences of opinion to the attention of the engagement leader or others within the Office without fear of reprisals, and encourages a culture where team members are comfortable discussing differences of opinion within the team and with the engagement leader.

It is important to identify differences of opinion at an early stage. The audit report is not dated until any differences in opinion are resolved.

OAG Audit 3082 provides guidance on resolving differences of opinion.

Related Sections

OAG Audit 1161 Documenting the evidence of the extent of review
OAG Audit 1172 Modifications to audit documentation after final assembly
OAG Audit 1173 Matters arising after the date of the assurance engagement report
OAG Annual Audit 2210 Communication with those charged with governance
OAG Audit 3011 Acceptance and continuance
OAG Audit 3031 Independence
OAG Annual Audit 3040 Terms of the audit engagement
OAG Audit 3063 Quality reviewer responsibilities
OAG Audit 3071 Review of audit work and documentation
OAG Audit 3081 Consultations
OAG Audit 3082 Resolution of differences of opinion
OAG Annual Audit 3090 Use of auditor’s experts
OAG Annual Audit 3100 Specialists in accounting or auditing
OAG Annual Audit 4010 Team Planning Meetings
OAG Annual Audit 5020 Understanding the entity and its environment