Learning Objectives

Supervisory Review

• 
  in charge reviews work of staff accountant
  
• 
  manager reviews work of in charge
  
• 
  partner reviews manager’s work
  

Do analytical procedures

• 
  review of trends and important ratios
  
• 
  review of unexpected audit findings
  

Review working papers

• 
  reviewed by an independent member of the audit firm
  
• 
  reviewed for results of audit tests
  
• 
  reviewed for sufficiency of evidence
  
• 
  make a completing-the-engagement checklist
  
• 
  make an unadjusted error worksheet
  

Evaluate audit findings for material misstatement

• 
  sign off completion of steps in audit program
  
• 
  identify monetary misstatements in financial statements
  
• 
  propose adjustments to financial statements
  

Client approval of adjusting entries

• 
  proposed the manager approves adjusting entries
  
• 
  obtain client approval for all proposed adjusting and reclassification journal entries
  

Review laws and regulations

• 
  Review recent changes in statutes and regulations
  
• 
  Test compliance with regulations
  

Evaluate entity’s continuance as a going concern

• 
  review normal indications of risk
  
• 
  do analytical procedures
  
• 
  determine if going concern problems can be mitigated by other factors
  

review of the engagement is performed by a manager or partner not working on the engagement to provide an objective assessment of compliance with firm standards (and SOX where applicable). For auditing firms with multiple offices, it is common practice for review teams to visit the various offices periodically and review selected engagements.

Before signing off on the audit work, the in-charge or senior accountant must make sure that all phases of the work have been concluded in accordance with the audit plan- ning memorandum, that applicable audit procedures have been satisfactorily completed, the audit objectives have been satisfied, that all is done in line with ISAs and that the working papers reflect conclusions supporting the audit opinion. Some audit firms, as we will see in Chapter 13 Overview of a Group Audit, draft an overall memorandum at the conclusion of the engagement commenting on the fairness of the presentation.

ILLUSTRATION 11.11