TOP AUDITING ISSUES FOR 2013 - CCH

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MODULE 4 — CHAPTER 12 — Working with the New Codification of Statements on Auditing Standards (Clarified) 141 Establish a Timeline Firms should establish a timeline for transition for the firm as a whole and for each engagement. This should include: Reviewing the firm’s clients to determine which will be affected first Reviewing the firm’s audit methodologies and practice aids, to determine which will be affected first This timeline should consider the time it will take to train staff, update firm methodologies and audit material, and communicate with clients. Establish a Transition Team Firms should establish a transition team or teams. This may include: Designating an owner or owners to become expert, and to take the lead in, understanding and implementing the new standards Establishing teams at various levels of the firm to develop revisions to the firm’s audit methodologies Firms should not ignore the opportunity to include lesser-experienced staff in these teams. This will provide them with educational and professional development opportunities, and will give the firm the benefit of their perspective on the transition. This is particularly important since their perspective will necessarily be different from that of the more seasoned practitioner and since they will be the firm’s “first line” in implementing the new standards in practice. Conduct Staff Training Staff training should begin prior to the start of the first engagement under the new standards. Smaller firms in particular may be tempted to adopt a “learn-as-you-go” approach to implementation. This is almost certain, at its best, to lead to inefficiencies in the engagements. These will be multiplied if the firm has more than one auditor or audit team conducting different audits. At its worst, this can lead to engagements that are not in conformity with the new standards. Many third-party providers, including the AICPA, offer training vehicles or media such as Power-Point presentations that can easily be adapted to individual firms’ needs. Thus there should be no need to spend time creating training programs or materials from scratch. Firms should, however, be careful to customize these presentations to their own needs by eliminating materials that do not apply to their practices. In conducting training programs, firms may consider: Using a mix of different training modalities, which may include: Live presentations Short written memoranda
142 TOP AUDITING ISSUES FOR 2013 CPE COURSE Third-party or internally created presentations such as webcasts Third-party or internally created self-study programs Detailed written materials Conducting multiple training sessions at different times, to ease the burden of absorbing too much material in too short a time Conducting varying levels of training for different levels of staff For firms that rely on third-party practice aids, it is important that staff understand the new standards and how the third-party provider has incorporated them into the practice aids. Relying upon staff to follow new practice aids “straight out of the box” is, like the “learn-as-you-go” approach discussed above, an invitation to inefficiency and noncompliance. Update the Firm’s Materials Based on the consideration of how the new standards will affect the firm’s practice, its quality control materials, word processing templates, and other materials used in its audits will need to be updated. Updating will include, at a minimum: The firm’s quality control document The firm’s subscriptions to third-party quality control materials and practice aids Engagement letters Auditor’s reports STUDY QUESTION 4. Updating of the firm’s materials for the effects of the new standards will most likely include, at a minimum, all of the following except: a. Engagement letters b. The firm’s subscriptions to third-party quality control materials c. The firm’s quality control document d. The audit program for cash Communicate with Clients Communicating the effects of these changes on the conduct of the audit from a client’s perspective will help engagements under the new standards run more smoothly. Many firms are using standardized client letters. Points to consider include the following. Engagement letters. The client should expect a more detailed description of management’s responsibilities in the engagement letter. These responsibilities have not changed, however. Clients should also expect the firm to review
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69 MODULE 2: IMPLEMENTATION ISSUES
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CCH LEARNING CENTER At CCH, we reco
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