Definition
Most audit firms use a ladder of roles. Staff, also called associates, perform tests and prepare workpapers. Seniors plan and supervise fieldwork and review staff work. Managers review the engagement as a whole, handle client communication, and manage budgets. Senior managers and directors oversee multiple engagements. The engagement partner has overall responsibility for the engagement and for the report, as AU-C 220 and the firm's quality management system require.
Why it matters in an audit or review
Review layering supports audit quality. The engagement partner must be involved throughout and take responsibility for direction, supervision, and review. Workpapers record the preparer and reviewer, with sign-off dates. A firm with few people may compress levels, so the partner reviews more directly, which affects time budgets and review notes.
Example
Illustrative: a staff auditor tests 25 expense items and signs off the workpaper. The senior reviews it and clears questions, the manager reviews the summary and conclusions, and the partner reviews significant risks and the draft report.
Common mistakes
Allowing one person to prepare and approve a workpaper they alone reviewed.
FAQ
Who signs the audit report?
The report carries the firm's signature, and the engagement partner is responsible for it.
Sources
- AICPA, AU-C Section 220, Quality Management for an Engagement Conducted in Accordance With GAAS (SAS No. 146)
- AICPA, SQMS No. 1, A Firm's System of Quality Management
- AICPA, AU-C Section 230, Audit Documentation (preparer and reviewer identification)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error