Management of engagements;

              N^
Management of Engagements
by Russell E. Palmer
V )
Today, as client organizations grow larger and the
scope and depth of services provided by CPAs expands,
it is essential that more emphasis be placed on the effec­tive
management of engagements. This need is empha­sized
in Statements on Auditing Procedure Number 33,
"An auditor typically works within economic limits; his
opinion, to be economically useful, must be formulated
within a reasonable length of time and at reasonable cost."
The ability to manage is especially important in view
of the TRB&S integrated services approach. The job
manager must constantly be aware of ways he can provide
maximum service to the client within appropriate eco­nomic
limits. Effective management, however, requires
not only the efforts of the person primarily responsible for
the engagement, but also effective utilization of manage­ment
techniques by the staff member responsible for each
area of the engagement.
The qualities required in a person moving up in the
public accounting profession change and shift in impor­tance
as the individual progresses. In day-to-day service
to clients, however, the presence of two qualities is essen­tial
— the ability to manage effectively and technical
competence. Initially a person entering the profession is
mainly concerned with the latter, but as he accepts addi­tional
responsibility the ability to manage becomes in­creasingly
important.
This article outlines areas to be considered in managing
an audit engagement. It is divided into four categories:
Planning
Controlling
On-the-job Training
Review and Completion
PLANNING
Preliminary review
To be effective in planning the engagement, it is impor­tant
that the individuals concerned have a knowledge of
the client's industry. This knowledge provides the founda­tion
for the business approach to the audit process. It
enables the manager to ascertain areas of special audit
significance, risk-type engagements and special staffing
situations. It provides the auditor with industry informa­tion
and ideas from which to formulate recommendations
to the client.
The individual can best gain this knowledge by read­ing
trade publications and inter-firm industry information
concerning the client's industry. Annual reports of other
companies in the industry should be reviewed, and it is
often advantageous to refer to the Firm Directory and
communicate with other offices having clients in the same
industry. The other office can furnish a program of exam­ination,
the letter of recommendations, audit techniques
utilized, information concerning special services provided
for the client, and other pertinent information on engage­ment
management.
Prior to the start of the field work, the in-charge ac­countant
should review the previous year's working
papers, memoranda, reports, the tax and correspondence
files and the letter of recommendations. He should re-acquaint
himself with disposition of the problems of the
previous year, and review the permanent file and program
of examination. He should also discuss the engagement
with the supervisor or manager to assure himself that he
is familiar with all current problems and information
involving the client.
MARCH, 1965 27