Dialogue
Audit Risk Assessment
FROM: SEP-OCT 2003 ISSUE
I would like to make the following comments in response to the article entitled "Audit Risk," which appeared in the "Standards" section of the May-June 2003 issue of CGA Magazine. It is all very well to improve the audit risk model, but it is still necessary to apply the base model. In reality, accounting firms must complete engagements by the agreed-upon deadline. Audit fees are negotiated by the partners prior to the risks assessment, and then the auditor in charge of the engagement must plan the work so that it will be completed on time. I also point out that partners do not necessarily pass on relevant information that they have and may find it difficult to convey their knowledge to the auditor in charge.
For example, I was senior auditor for a household product distribution company. The company was a long-time client of our firm's, but the first time I was senior auditor, I read the systems descriptions and realized they were more than seven years old. Also, there was no description of the costing system. I took the time to update the systems descriptions and to become completely familiar with the costing system. Having done that, I had a better understanding of the company and its internal controls. No principal or partner had given me any information on the company prior to my beginning the engagement. I exceeded the deadline and was told that it was not necessary to update the systems descriptions because the company did not represent a risk for the firm. However, I knew that I had carried out my task diligently and that the file would be easier to follow in future.
The problem is that if the work requires extra time, the partners expect the auditors to perform the extra work and not bill the client for it or include it on the time sheet; in other words, do the work without being paid! In conclusion, front-line employees are less experienced and do not have the information they need to perform their work in accordance with existing standards.
Marie-Josée Bolduc, B.B.A.
Internal auditor and CGA student
Québec City
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