28 September 2004

Auditing Competency Standard

for
Registered Company Auditors
Log Book
CPA Australia
Institute of Chartered Accountants in Australia
2
1. The audit activities of a Registered Company Auditor (RCA) may be categorised into one of four generic competencies or classes of
activity. These are the planning evidence gathering evidence evaluation and decision ma!ing classes of activity. "ach of these generic
classes of activity is performed in a particular conte#t or phase of the audit. It may be said that in a financial statement audit there are five
different conte#ts in $hich the classes of activity are performed. The conte#ts are client acceptance% retention audit planning control testing
substantive testing and opinion formulation. As each of the four generic classes of activity is performed in each of the five conte#ts there are
thus &' different activity%conte#t combinations or &' different tas!s applicants for registration as company auditors are re(uired to be able to
competently perform.
&. The audit tas!s and the conte#t in $hich they are performed may be depicted diagrammatically as follo$s)
TASKS CONTEXT in wic tasks are to !e performed
C"ient
acceptance#
continuance
Audit
p"anning
Contro"
testing
Su!stanti$e
testing
Opinion
formu"ation
Planning 1.1 &.1 *.1 +.1 ,.1
"vidence
gathering
1.& &.& *.& +.& ,.&
"vidence
evaluation
1.* &.* *.* +.* ,.*
-ecision.
ma!ing
1.+ &.+ *.+ +.+ ,.+
*. The numbers $ithin each cell (above) refer to the &' tas!%conte#t combinations in $hich applicants are re(uired to be proficient. Thus
1.1 refers to the tas! of planning in the conte#t of client acceptance%retention. "ach of these &' tas!%conte#t combinations may be described in
more detail as a specific tas!. /or e#ample Tas! 1.1 may be described as the tas! of identifying the criteria necessary for the client
acceptance%retention decision on a (potential) audit engagement. Associated $ith each specific tas! are a number of sub.tas!s relevant to the
Preliminary draft dated 0eptember 1+ &'1+
3
proficient performance of the tas! at RCA level. /or e#ample sub.tas!s associated $ith Tas! 1.1 are to guide supervise and revie$ the audit
team in (i) the development of a discussion document on the nature of an audit1 (ii) the re(uirements relating to the audit1 and (iii) the
development of preliminary policies on client acceptance% retention. The ability to proficiently perform sub.tas!s associated $ith a specific tas!
may be used as indicators of an applicant2s ability to competently perform the specific tas!.
+. The &' specific tas!s in $hich applicants are re(uired to be proficient together $ith associated sub.tas!s are listed in this 3og 4oo!. The
sub.tas!s are indicators of an applicant2s proficiency in each tas!. The 3og 4oo! is a record of the details relating to the various tas!s RCAs are
re(uired to perform.
,. 5embers $ishing to apply for registration as a company auditor are re(uired to record the follo$ing details of all such tas!s)
(a). The name of the audit engagement(s) during $hich the tas!s $ere performed and demonstrated to the satisfaction an assessor.
(b) The name of the audit firm responsible for the engagement(s).
(c) The name of the assessor or other person revie$ing or supervising the applicant2s $or!.
(d) The dates (months and year) in or during $hich the tas!s $ere performed.
6. 7hen the assessor is satisfied as to the competency of an applicant the applicant should record details of the tas! in the 3og 4oo!. The
assessor should indicate by signing the appropriate section in the 0tatement by Assessor(s) (at the end of this 3og 4oo!) that the applicant
has demonstrated that he%she is competent in performing those particular tas!s in that particular conte#t. The applicant2s assessor at the date
of application for registration should also sign the section in the 0tatement by Assessor(s) that he%she believes the applicant is sufficiently
competent to be registered as a Company Auditor
8. Applicants should demonstrate all of the sub.tas!s that relate to a particular tas! on the one audit engagement. In other $ords
applicants should not demonstrate one sub.tas! that relates to a particular tas! on one audit engagement and another related sub.tas! on
another engagement.
9. As it is possible that applicants2 competencies may lapse over time an applicant should attempt to commence demonstrating their
competencies in the various tas!s to his%her assessor not more than five years before the anticipated date of application for registration. 7here
tas!s are demonstrated more than five years prior to the date of application for registration then a referee ($ho may also be the applicant2s
assessor) should state in respect of each tas! demonstrated more than five years prior to the date of application that the applicant has
ac(uired and retained the competencies necessary to perform those tas!s.
:. It is also unli!ely that an applicant $ill be able to ac(uire the necessary s!ills to perform the various tas!s $ithin either (a) t$o years from
being admitted as a member (of CPAA or ICAA) or (b) five years from first commencing employment $ith the accounting firm in $hich the
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applicant ac(uired audit competencies. 7here all tas!s $ere demonstrated $ithin the t$o year period referred to or the date of application is
less than five years after the date of first employment by the applicant by an accounting firm then a referee ($ho may be the applicant2s
assessor) should state ho$ the applicant $as able to ac(uire the necessary s!ills $ithin such a relatively short period of time.
1'. 7here an applicant is unable to demonstrate to an assessor some or all of the tas!s referred to in the 3og 4oo! the applicant should)
(a) complete for each of the &' tas!s in the 3og 4oo! all sections. The 3og 4oo! should then indicate for each of the tas!s in $hich
the applicant believes he or she is competent the name of the audit engagement(s) during $hich the tas!s $ere performed the
name of the audit firm responsible for the engagement(s) the name of the person revie$ing or supervising the applicant2s $or! and
the dates (months and year) in or during $hich the tas!s $ere performed.
(b) obtain a statement by a referee that in respect of each of the tas!s not demonstrated to an assessor the applicant has ac(uired
and retained the competencies re(uired to perform those tas!s and in relation to each tas! not demonstrated to an assessor the
basis for ma!ing such a statement. The referee should also state he%she believes the applicant is sufficiently competent to be
registered as a Company Auditor.
11. Reference is made throughout the 3og 4oo! to ;audit staff< and the ;audit team<. The term ;audit team< refers to the engagement partner
together $ith the audit staff1 the term ;audit staff< refers to all employees of an audit firm engaged on the audit but does not include either the
engagement or revie$ partners. It is ac!no$ledged that in some audit engagements the audit staff and the audit team may comprise =ust the
applicant and his or her assessor and there may be no audit staff apart from the applicant. Therefore $here the 3og 4oo! lists as a sub.tas!
;-iscuss $ith audit staff aspects of >< and the applicant is the only staff member then the applicant should demonstrate to the assessor that
he or she $ould be capable of discussing such aspects $ith audit staff had there been any.
1&. 7hen the applicant has demonstrated all tas!s to the satisfaction of an assessor(s) and the assessor(s) has (have) completed the
0tatement by Assessor(s) the completed 3og 4oo! should be for$arded $ith the application for registration. 0ee Appendi# I?) @uidance for
Registration as a Company Auditor.
************
Preliminary draft dated 0eptember 1+ &'1+
5
Conte%t& C"ient acceptance# retention Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 1.1 Planning: Identify the criteria necessary for the client acceptance%
retention decision on a potential% e#isting audit engagement.
Sub-tasks) @uide supervise and revie$ the audit team in (i) the
development of a discussion document on the nature of an audit1
(ii) the re(uirements relating to the audit1 and (iii) the development
of preliminary policies on client acceptance% retention.
Task 1.2 Evidence gathering: @ather evidence relevant to the client
acceptance% retention decision.
Sub-tasks: Anderta!e bac!ground research on the industry in
(uestion to establish industry ris! parameters. -etermine and
document the full range of critical re(uirements applying to the
organisation. -etermine relevance to the audit of specific
regulatory re(uirements. @uide supervise and revie$ the audit
staff in (i) the ac(uisition of data relevant to the acceptance%
retention decision1 (ii) the conduct of research related to industry
ris! parameters1 and (iii) the identification of specific regulatory
re(uirements. -evelop consciousness in !ey audit staff of the
criteria relating to the acceptance% retention decision. As
re(uested support the negotiation process $ith the (prospective)
client. 4rief the audit team on applicable regulatory
re(uirements and the consideration and implications of the
treatment of ambiguities.
()* Conte%t& C"ient acceptance# retention (continued) Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 1.3 Evidence evaluation: "valuate evidence relevant to the client
acceptance% retention decision.
Sub-tasks: Collaborate in the assessment of criteria relevant to
the client acceptance% retention decision to identify factors $here
there might be difficulties in meeting the criteria. -evelop
proposals as to ho$ these difficulties might be met. Identify
issues or conditions relating to criteria that $ill be referred for
$ider consideration. After consultation $ith relevant staff or
e#perts evaluate (prospective) client criteria in relation to
ob=ectives and a ris!%return position1 negotiate these $ith
leadership of the audit pro=ect or revie$ partner. In association
$ith leadership of the audit pro=ect or revie$ partner resolve
issues conditions and difficulties relating to the criteria identified.
Task 1.4 Decision making: -ecide $hether to accept%re=ect a prospective
client or retain%relin(uish an e#isting client.
Sub-tasks: -evelop a preliminary discussion document on the
nature of the audit engagement focussing on client activities and
ris!s1 negotiate approval of this document $ith leadership of the
audit pro=ect or revie$ partner. -ocument the final agreement
$ith the client including parameters conditions and liaison
arrangements. 4rief the audit team on the nature of the audit
that has been accepted% retained.
7
+)* Conte%t) Audit p"anning Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 2.1 Planning) Identify the criteria necessary for the decision as to the
appropriate audit plan.
Sub-tasks: 3ead the development of audit strategies. "stablish
parameters for the development of the audit plan . in terms of
ob=ectives identified ris!s regulatory re(uirements and cost
structures. @uide supervise and revie$ the audit staff in (i) the
development of preliminary staff profiles (numbers s!ills levels of
seniority) related to the audit1 (ii) the procedures for the audit
engagement1 and (iii) the development of resource pro=ections
relating to an audit. Assign responsibilities for implementation of
the audit plan. Approve%arrange for necessary staffing
logistical support and training.
Task 2.2 Evidence gathering: @ather evidence relevant to the determination
of the audit plan.
Sub-tasks: @uide supervise and revie$ the audit staff in (i) the
revie$ and documentation of operational and organisational
structures and systems in line $ith audit ob=ectives1 (ii) liaison
processes used by the audit staff (including its documentation)1
and (iii) the ac(uisition of data relevant to the determination of the
audit plan.
8
+)* Conte%t& Audit p"anning (continued) Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 2.3 Evidence evaluation: "valuate evidence relevant to the audit plan.
Sub-tasks) @uide supervise and revie$ the audit staff in their
assessments of both the audit ris!s associated $ith the client2s
organisation and the cost.effectiveness of the preliminary audit
plan. 3ead discussions on possible and relevant audit
strategies and in the development of a preliminary audit plan.
Task 2.4 Decision making: -ecide the appropriate audit plan.
Sub-tasks: @uide supervise and revie$ the audit staff in their
drafting and documentation of the audit plan. Revie$ and
finalise the audit plan in the light of best practice or professional
standards. Bvervie$ the documentation of the final audit plan.
-iscuss !ey implementation issues of the audit plan $ith
relevant staff including cost.effectiveness issues. -iscuss
acceptance of the audit plan $ith the leadership of the audit
pro=ect or revie$ partner. Assign preliminary responsibilities in
relation to the audit (e.g. for developing file structures and
procedures). 4rief the audit team on ob=ectives parameters
and conditions of the audit.
9
,)* Conte%t) Contro" testing Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 3.1 Planning: Identify the nature timing and e#tent of audit procedures
necessary to be able to form an opinion as to $hether planned
reliance on internal control procedures is appropriate.
Sub-tasks: @uide supervise and revie$ the audit staff in the
development of the audit programs for control testing.
Task 3.2 Evidence gathering: @ather evidence relevant to the effectiveness
of operation of internal control procedures upon $hich reliance
has been planned.
Sub-tasks: @uide supervise and revie$ the audit staff in (i) the
liaison processes used by the audit staff (including its
documentation) during control testing1 (ii) the ac(uisition of data
relevant to the determination of the effectiveness of internal
control procedures1 and (iii) the budgeting monitoring and day to
day administration of this phase of the audit. 5onitor the
implementation of the audit plan as it relates to control testing to
pre.set schedules%performance indicators.
10
,)* Conte%t) Contro" testing (continued) Audit
c"ient
Audit
firm
Assesso
r
'ate Comments
Task 3.3 Evidence evaluation: "valuate the evidence relevant to the
effectiveness of operation of internal control procedures
Sub-tasks: @uide supervise and revie$ the audit staff2s (i) final
evaluations of control ris!1 (ii) evaluation of sufficiency and
appropriateness of evidence gathered (iii) (ualitative and
(uantitative analysis of control deviations1 (iv) discussion of the
conse(uence of the control deviations $ith the client organisation1
and (v) final evaluations of the control ris!s associated $ith the
effectiveness of internal control procedures. Conclude as to the
sufficiency and appropriateness of evidence gathered during
control testing Conclude as to the final evaluations of control
ris!.
Task 3.4 Decision making: -ecide $hether planned reliance on internal
control procedures is appropriate.
Sub-tasks: @uide supervise and revie$ audit staff in (i) $or!
performed during control testing and conclusions prepared by
audit staff1 (ii) documentation of conclusions as to the
effectiveness of control procedures upon $hich reliance had been
planned1 (iii) identification of conse(uent changes if any to the
audit plan1 (iv) briefing of staff of changes to audit plan. 5onitor
performance of control testing against budget and recommend on
revised resource allocations%pro=ections. Consider and
recommend on substantive changes to audit plan. Advise
leadership of the audit pro=ect or revie$ partner on ma=or problems
or issues and recommend solutions%actions. As necessary
arrange for documented revision of the audit plan and brief
relevant staff on the changes.
-)* Conte%t) Su!stanti$e testing
Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 4.1 Planning: Identify the nature timing and e#tent of audit procedures
necessary to be able to form an opinion on the e#tent of
misstatements in account balances and underlying classes of
transactions.
Sub-tasks: @uide supervise and revie$ the audit staff in their
development of the audit programs for substantive testing.
Task 4.2 Evidence gathering: @ather evidence relevant to the e#tent of
misstatements in account balances and underlying classes of
transactions.
Sub-tasks: @uide supervise and revie$ the audit staff in (i) the
liaison processes used by the audit staff (including its
documentation)1 (ii) the ac(uisition of data relevant to the
determination of the e#tent of misstatements in account balances
and underlying classes of transactions1 (iii) the budgeting
monitoring and day to day administration of this phase of the audit.
5onitor the implementation of the audit plan as it relates to
substantive testing to pre.set schedules%performance indicators.
Task 4.3 Evidence evaluation: "valuate evidence relevant to the e#tent of
misstatements in account balances and underlying classes of
transactions.
Sub-tasks: @uide supervise and revie$ the audit staff in their (i)
evaluation of the sufficiency and appropriateness of evidence
gathered1 (ii) the (ualitative and (uantitative analysis of
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misstatements1 (iii) discussion of the conse(uence of the
misstatements $ith the client organisation1 and (iv) final evaluation
of the e#tent of misstatements in account balances and underlying
classes of transactions. Conclude as to the sufficiency and
appropriateness of evidence gathered during substantive testing
Conclude as to the final evaluation of misstatements in account
balances and underlying classes of transactions.
13
-)* Conte%t) Su!stanti$e testing (continued) Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task 4.4 Decision making: -ecide the e#tent of misstatements in account
balances and underlying classes of transactions.
Sub-tasks: Advise leadership of the audit pro=ect or revie$ partner
on ma=or problems or issues and recommend solutions%actions.
Consider and recommend on substantive changes to the audit
plan. As necessary arrange for the documented revision of the
audit plan and brief relevant staff on the changes.
14
.)* Conte%t) Opinion formu"ation Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task .1 Planning: Identify the nature timing and e#tent of audit procedures
necessary to be able to form an opinion on the financial report.
Sub-tasks: Identify the factors relevant to the determination of
materiality for reporting purposes. @uide supervise and revie$
the audit staff in their development of the audit programs for this
phase of the audit.
Task .2 Evidence gathering: @ather evidence relevant to the formation of
an opinion on the financial report.
Sub-task: 3ead the liaison processes used by the audit team
(including its documentation). 5onitor the implementation of the
audit plan during this phase of the audit to pre.set schedules%
performance indicators. 0upervise the chec!ing and editing of
the (draft) final report for the overall audit.
15
.)* Conte%t) Opinion formu"ation (continued) Audit
c"ient
Audit
firm
Assess
or
'ate Comments
Task .3 Evidence evaluation: "valuate evidence relevant to the formation
of an opinion on the financial report.
Sub-tasks: @uide supervise and revie$ audit staff in their
evaluation of both the sufficiency and appropriateness of evidence
gathered during this phase of the audit and the factors relevant to
the determination of the type of opinion to be included in the
auditor2s report. Conclude as to sufficiency and
appropriateness of evidence gathered during this phase of the
audit. Conclude as to factors relevant to the determination of
the type of opinion to be included in the auditor2s report.
-iscuss $ith the client organisation the conse(uence of the
evidence gathered on the type of opinion that may issue.
Advise leadership of the audit pro=ect or revie$ partner on ma=or
problems or issues and recommend solutions%actions.
Task .4 Decision making: -ecide the appropriate audit opinion on the
financial report.
Sub-tasks: -iscuss draft report items $ith appropriate level of
client organisation2s staff. Revie$ accuracy completeness and
ob=ectivity of documentation supporting the final report. Advise
leadership of the audit pro=ect or revie$ partner on draft final
report including unresolved issues. Revie$ structure of (draft)
final report in terms of audit ob=ectives structure of underlying
evidence% reasoning and reasonableness. 0upervise any
redrafting of final report and revie$ its final form. 5onitor
issuance of final report.
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STATE/ENT B0 ASSESSOR 1S2
1) I am a Registered Company Auditor.
&) The applicant has demonstrated to me that he%she is competent in performing the follo$ing tas!s in the conte#ts described belo$.
*) I have sufficient !no$ledge of the applicant2s $or! to be able to give this verification.
1. Context: Client acceptance/ retention !ssessor"s name and #irm Signature Date
1.1 Planning: Identification of criteria necessary for the client
acceptance% retention decision
1.2 Evidence gathering: @athering of evidence relevant to the client
acceptance% retention decision.
1.3 Evidence evaluation: "valuation of evidence relevant to the
client acceptance% retention decision.
1.4 Decision making: The client acceptance% retention decision.
2. Context: Audit planning !ssessor"s name and #irm Signature Date
2.1 Planning: Identification of criteria necessary for the decision as
to the appropriate audit plan.
2.2 Evidence gathering: @athering of evidence relevant to the audit
plan decision.
2.3 Evidence evaluation: "valuation of evidence relevant to the audit
plan decision.
2.4 Decision making: The decision as to the appropriate audit plan.
17
3. Context: Control testing !ssessor"s name and #irm Signature Date
3.1 Planning: Identification of the nature timing and e#tent of audit
procedures necessary to be able to form an opinion as to $hether
planned reliance on internal control procedures is appropriate.
3.2 Evidence gathering: Performance of the audit procedures
necessary to gather evidence relevant to the effectiveness of internal
control procedures.
3.3 Evidence evaluation: "valuation of evidence relevant to the
effectiveness of internal control procedures.
3.4 Decision making: The decision as to $hether planned reliance
on internal control procedures is appropriate.
4. Context: Substantive testing !ssessor"s name and #irm Signature Date
4.1 Planning: Identification of the nature timing and e#tent of audit
procedures necessary to be able to form an opinion on the e#tent of
misstatements in account balances and underlying classes of
transactions.
4.2 Evidence gathering: Performance of the audit procedures
necessary to gather evidence relevant to the e#tent of misstate.
ments in account balances and underlying classes of transactions.
4.3 Evidence evaluation: "valuation of evidence relevant to the
e#tent of misstatements in account balances and underlying classes
of transactions.
4.4 Decision making: The decision as to the e#tent of misstate.
ments in account balances and underlying classes of transactions.
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5. Context: Opinion formulation !ssessor"s name and #irm Signature Date
.1 Planning: Identification of the nature timing and e#tent of audit
procedures necessary to be able to form an opinion on the financial
report.
.2 Evidence gathering: @athering of evidence relevant to the
formation of an opinion on the financial report.
.3 Evidence evaluation: "valuation of evidence relevant to the
formation of an opinion on the financial report.
.4 Decision making: The decision as to the appropriate audit
opinion on the financial report.
I believe the applicant is sufficiently competent to be registered as a Company Auditor.
..............................................................(0ignature of assessor at the time of application)
..............................................................(Assessor2s name and firm)
...............................................................(-ate)
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