Engagement Resources (Ref: Para. 25—28)Engagement Resources (Ref: Para. 25—28)

Engagement Resources (Ref: Para. 25–28)

1. Under ASQM 1, the resources assigned or made available by the firm to support the performance of audit engagements include:

• Human resources;
• Technological resources; and
• Intellectual resources.

1. Resources for an audit engagement are primarily assigned or made available by the firm, although there may be circumstances when the engagement team directly obtains resources for the audit engagement. For example, this may be the case when a component auditor is required by statute, regulation or for another reason to express an audit opinion on the financial report of a component, and the component auditor is also appointed by component management to perform audit procedures on behalf of the group auditor.[35] In such circumstances, the firm’s policies or procedures may require the engagement partner to take different actions, such as requesting information from the component auditor, to determine whether sufficient and appropriate resources are assigned or made available.
2. A relevant consideration for the engagement partner, in complying with the requirements in paragraphs 25 and 26, may be whether the resources assigned or made available to the engagement team enable fulfillment of relevant ethical requirements, including ethical principles such as professional competence and due care.

Human Resources

1. [Deleted by AUASB. Refer Aus A62.1]

Aus A62.2 Human resources include members of the engagement team (see also paragraphs A5, A15–A21) and, where applicable, an auditor’s external expert.

Technological Resources

1. The use of technological resources on the audit engagement may assist the auditor in obtaining sufficient appropriate audit evidence. Technological tools may allow the auditor to more effectively and efficiently manage the audit. Technological tools may also allow the auditor to evaluate large amounts of data more easily to, for example, provide deeper insights, identify unusual trends or more effectively challenge management’s assertions, which enhances the ability of the auditor to exercise professional scepticism. Technological tools may also be used to conduct meetings and provide communication tools to the engagement team. Inappropriate use of such technological resources may, however, increase the risk of overreliance on the information produced for decision making purposes, or may create threats to complying with relevant ethical requirements, for example, requirements related to confidentiality.
2. The firm’s policies or procedures may include required considerations or responsibilities for the engagement team when using firm approved technological tools to perform audit procedures and may require the involvement of individuals with specialised skills or expertise in evaluating or analysing the output.
3. When the engagement partner requires individuals from another firm to use specific automated tools and techniques when performing audit procedures, communications with those individuals may indicate that the use of such automated tools and techniques needs to comply with the engagement team’s instructions.
4. The firm’s policies or procedures may specifically prohibit the use of certain IT applications or features of IT applications (e.g., software that has not yet been specifically approved for use by the firm). Alternatively, the firm’s policies or procedures may require the engagement team to take certain actions before using an IT application that is not firm-approved to determine it is appropriate for use, for example by requiring:

• The engagement team to have appropriate competence and capabilities to use the IT application.
• Testing the operation and security of the IT application.
• Specific documentation to be included in the audit file.

1. The engagement partner may exercise professional judgement in considering whether the use of an IT application on the audit engagement is appropriate in the context of the engagement, and if so, how the IT application is to be used. Factors that may be considered in determining whether a particular IT application, that has not been specifically approved for use by the firm, is appropriate for use in the audit engagement include whether:

• Use and security of the IT application complies with the firm’s policies or procedures.
• The IT application operates as intended.
• Personnel have the competence and capabilities required to use the IT application.

Intellectual Resources

1. Intellectual resources include, for example, audit methodologies, implementation tools, auditing guides, model programs, templates, checklists or forms.
2. The use of intellectual resources on the audit engagement may facilitate the consistent application and understanding of Australian Auditing Standards, law and regulation, and related firm policies or procedures. For this purpose, the engagement team may be required, in accordance with the firm’s policies or procedures, to use the firm’s audit methodology and specific tools and guidance. The engagement team may also consider whether the use of other intellectual resources is appropriate and relevant based on the nature and circumstances of the engagement, for example, an industry specific methodology or related guides and performance aids.

Sufficient and Appropriate Resources to Perform the Engagement (Ref: Para. 25)

1. In determining whether sufficient and appropriate resources to perform the engagement have been assigned or made available to the engagement team, ordinarily the engagement partner may depend on the firm’s related policies or procedures (including resources) as described in paragraph A6. For example, based on information communicated by the firm, the engagement partner may be able to depend on the firm’s technological development, implementation and maintenance programs when using firm-approved technology to perform audit procedures.

Competence and Capabilities of the Engagement Team (Ref: Para. 26)

1. When determining that the engagement team has the appropriate competence and capabilities, the engagement partner may take into consideration such matters as the team’s:

• Understanding of, and practical experience with, audit engagements of a similar nature and complexity through appropriate training and participation.
• Understanding of Australian Auditing Standards and applicable legal and regulatory requirements.
• Expertise in specialised areas of accounting or auditing.
• Expertise in IT used by the entity or automated tools or techniques that are to be used by the engagement team in planning and performing the audit engagement.
• Knowledge of relevant industries in which the entity being audited operates.
• Ability to exercise professional scepticism and professional judgement.
• Understanding of the firm’s policies or procedures.

1. Internal auditors and an auditor’s external expert are not members of the engagement team. ASA 610[36] and ASA 620[37] include requirements and guidance relating to the assessment of the competence and capabilities of internal auditors and an auditor’s external expert, respectively.

Project Management

1. In situations where there are many engagement team members, for example in an audit of a larger or more complex entity, the engagement partner may involve an individual who has specialised skills or knowledge in project management, supported by appropriate technological and intellectual resources of the firm. Conversely, in an audit of a less complex entity with few engagement team members, project management may be achieved by a member of the engagement team through less formal means.
2. Project management techniques and tools may support the engagement team in managing the quality of the audit engagement by, for example:

• Increasing the engagement team’s ability to exercise professional scepticism through alleviating budget or time constraints that may otherwise impede the exercise of professional scepticism;
• Facilitating timely performance of audit work to effectively manage time constraints at the end of the audit process when more difficult or contentious matters may arise;
• Monitoring the progress of the audit against the audit plan,[38] including the achievement of key milestones, which may assist the engagement team in being proactive in identifying the need for making timely adjustments to the audit plan and the assigned resources; or
• Facilitating communication among members of the engagement team, for example, co-ordinating arrangements with component auditors and auditor’s experts.

Insufficient or Inappropriate Resources (Ref: Para. 27)

1. ASQM 1 addresses the firm’s commitment to quality through its culture that exists throughout the firm, which recognises and reinforces the firm’s role in serving the public interest by consistently performing quality engagements, and the importance of quality in the firm’s strategic decisions and actions, including the firm’s financial and operational priorities. ASQM 1 also addresses the firm’s responsibilities for planning for resource needs, and obtaining, allocating or assigning resources in a manner that is consistent with the firm’s commitment to quality. However, in certain circumstances, the firm’s financial and operational priorities may place constraints on the resources assigned or made available to the engagement team. In such circumstances, these constraints do not override the engagement partner’s responsibility for achieving quality at the engagement level, including for determining that the resources assigned or made available by the firm are sufficient and appropriate to perform the audit engagement.
2. The engagement partner’s determination of whether additional engagement level resources are required is a matter of professional judgement and is influenced by the requirements of this ASA and the nature and circumstances of the audit engagement. As described in paragraph A11, in certain circumstances, the engagement partner may determine that the firm’s responses to quality risks are ineffective in the context of the specific engagement, including that certain resources assigned or made available to the engagement team are insufficient. In those circumstances, the engagement partner is required to take appropriate action, including communicating such information to the appropriate individuals in accordance with paragraph 27 and paragraph 39(c). For example, if an audit software program provided by the firm has not incorporated new or revised audit procedures in respect of recently issued industry regulation, timely communication of such information to the firm enables the firm to take steps to update and reissue the software promptly or to provide an alternative resource that enables the engagement team to comply with the new regulation in the performance of the audit engagement.
3. If the resources assigned or made available are insufficient or inappropriate in the circumstances of the engagement and additional or alternative resources have not been made available, appropriate actions may include:

• Changing the planned approach to the nature, timing and extent of direction, supervision and review (see also paragraph A94).
• Discussing an extension to reporting deadlines with management or those charged with governance, when an extension is possible under applicable law or regulation.
• Following the firm’s policies or procedures for resolving differences of opinion if the engagement partner does not obtain the necessary resources for the audit engagement.
• Following the firm’s policies or procedures for withdrawing from the audit engagement, when withdrawal is possible under applicable law or regulation.

Considerations Specific to Public Sector Entities (Ref: Para. 25–28)

1. In the public sector, specialised skills may be necessary to discharge the terms of the audit mandate in a particular jurisdiction. Such skills may include an understanding of the applicable reporting arrangements, including reporting to the legislature or other governing body or reporting in the public interest. The wider scope of a public sector audit may include, for example, some aspects of performance auditing.