Procedures followed in Conducting an Audit
Procedures generally followed in conducting an audit by more than one firm of accountants and the division of work between them.
All auditors may be liable to the consequences of loss arising from negligence. Each joint auditor accepts all the obligations of the office of auditor and this can mean that losses flowing from a wrong auditor's report may be recovered from either of both auditors. Thus a joint auditor might be financially responsible for losses arising as a consequence of the negligence or incompetence of his fellow auditor.
Before accepting a joint office, an auditor must:
1. Consider whether he is prepared to serve jointly with the other auditor. He may well ask himself if he would take him as a partner.
2. Assure him that adequate review and control of all aspects of the audit can be prepared.
3. Ensure such professional indemnity insurance cover can be acquiring to cover the individual situation.
Several possible arrangements could be made:
1. Each joint auditor could conduct its own audit with its own standard documentation and files. Leading schedules would need to be photocopied and exchanged.
2. A unified set of documents and files could be produced by both firms. This may involve some modification of each firm's methods.
3. Each firm could use one standard set of documents and files using the standards of the larger of the two firms.
Whatever the techniques is used, extensive conversation and planning must lead the commencement of any audit work.
The considerations that are likely to dictate the division of work are as:
i. Expertise: Each firm may have individual expertise as in specific kinds of client, computers etc.
ii. Geography: The particular place of the firms and their branches must be believed.
iii. Competence: One of the joint auditors may be particularly competent along with small clients, the other along with large clients.
iv. Availability and Size of staff.
v. Cost: Audit costs may be minimised through a particular division of work.