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How are audits actually conducted irl?

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How are audits actually conducted irl?

Mainly, who exactly are in an engagement team?

ACCA's definition only explicitly states who are not included:
Engagement team - All partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform assurance procedures on the engagement. This excludes external experts engaged by the firm or by a network firm. The term “engagement team” also excludes individuals within the client’s internal audit function who provide direct assistance on an audit engagement when the external auditor complies with the requirements of ISA 610 (Revised 2013), Using the Work of Internal Auditors

Am I right in drawing my own conclusion that an engagement team consists of:
- one engagement partner who is in charge of the whole engagement
- a number of other audit partners (some of whom are key audit partners)
- a number of staff who are not audit partners but are employed by the audit firm?

I also found sources that say an audit partner is a full partner who has a financial stake in the company and that profit from assurance engagements is shared among the audit partners (after paying their employees?). So is this to say all (or most) audit firms are partnerships?

 

Other related definitions from ACCA Code of Ethics:
Career focus: Audit partner (accaglobal.com)

Audit engagement - A reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects), in accordance with an applicable financial reporting framework, such as an engagement conducted in accordance with International Standards on Auditing. This includes a Statutory Audit, which is an audit required by legislation or other regulation.

Audit team
(a) All members of the engagement team for the audit engagement;
(b) All others within a firm who can directly influence the outcome of the audit engagement, including:
        (i) Those who recommend the compensation of, or who provide direct supervisory, management or other oversight of the engagement partner in connection with the performance of the audit engagement, including those at all successively senior levels above the engagement partner through to the individual who is the firm’s Senior or Managing Partner (Chief Executive or equivalent);
        (ii) Those who provide consultation regarding technical or industry-specific issues, transactions or events for the engagement; and 
        (iii) Those who provide quality control for the engagement, including those who perform the engagement quality control review for the engagement; and
(c) All those within a network firm who can directly influence the outcome of the audit engagement

Engagement partner - The partner or other person in the firm who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.

External expert - An individual (who is not a partner or a member of the professional staff, including temporary staff, of the firm or a network firm) or organization possessing skills, knowledge and experience in a field other than accounting or auditing, whose work in that field is used to assist the professional accountant in obtaining sufficient appropriate evidence.

Key audit partner - The engagement partner, the individual responsible for the engagement quality control review, and other audit partners, if any, on the engagement team who make key decisions or judgments on significant matters with respect to the audit of the financial statements on which the firm will express an opinion. Depending upon the circumstances and the role of the individuals on the audit, “other audit partners” might include, for example, audit partners responsible for significant subsidiaries or divisions.

 

November 30th 2022 AN ACCA USER

Retagged November 30th 2022

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