(ASA 220, paragraph 12(a))

In Australia, Commonwealth, State or Territory Auditors-General are responsible for undertaking the majority of public sector audit engagements. Under audit legislation applicable in each jurisdiction, power is vested in the Auditor-General as the person appointed or authorised by a legislature for the purpose of exercising the functions and powers to conduct public sector audits. Under the Corporations Act^[62], only the person who holds office as the Auditor-General, or a person to whom the Auditor-General delegates the function or the power to conduct an audit, is taken to be registered as an auditor under the Act. As statutory auditor, the Auditor-General is ultimately responsible (accountable) to the legislature.

For practical reasons, due to the nature and magnitude of statutory responsibilities, individual Auditors-General are unlikely to have the capacity to personally discharge all the duties and functions required to be performed in their name and for which they are held accountable.

Depending on the legislative mandate applicable in the jurisdiction, an Auditor-General may be able to:

1. delegate responsibilities to an individual where that individual may be an Audit Office employee or an Audit Service Provider; and/or
2. authorise an individual (Audit Office employee or an Audit Service Provider) or firm (Audit Service Provider) to undertake audit functions under the direction of the Auditor-General.

In managing quality at the engagement level, ASA 220^[63] permits the Engagement Partner to assign the design or performance of some procedures, tasks or actions to appropriately skilled or suitably experienced members of the engagement team to assist the Engagement Partner. In such circumstances, ASA 220^[64] requires that the Engagement Partner shall continue to take overall responsibility for managing and achieving quality on the audit engagement.

Where the individual fulfilling the role of Engagement Leader in practice is also signing the audit opinion, practical application of ASA 220 should not be problematic and supplementary guidance provided in this section of the GS may not be relevant.

However, there may be circumstances where the Engagement Leader does not have delegation or authorisation to sign the audit opinion. This may be the case where the Auditor-General:

1. personally signs the auditor’s report;
2. legally delegates their authority to sign the auditor’s report to another individual (delegate signs in their own right); or
3. authorises another individual to sign the auditor’s report for and on behalf of the Auditor-General.

In practice, this may result in different scenarios such as:

1. the Auditor-General fulfilling the role of the Engagement Leader including signing the audit opinion.
2. an Audit Office employee fulfilling the role of the Engagement Leader including signing the audit opinion.
3. an Audit Office employee fulfilling the role of Engagement Leader in practice with the Auditor-General signing the audit opinion.
4. an Audit Office employee fulfilling the role of Engagement Leader in practice with another Audit Office employee signing the audit opinion.
5. an Audit Service Provider fulfilling the role of the Engagement Leader in practice with the Auditor-General or Audit Office employee signing the audit opinion.

Where the Engagement Leader assigned responsibility for the audit engagement and its performance in practice is not also signing the audit opinion, the Engagement Leader performs the assigned Engagement Partner responsibilities for and on behalf of the Signing Officer. For the individual signing the audit opinion to be able to sign and issue the auditor’s report, and take overall responsibility for the audit engagement and its performance (including taking overall responsibility for managing and achieving quality on the engagement as required in paragraph 13 of ASA 220), this individual may need to undertake additional procedures and/or obtain additional information from the Engagement Leader (and other members of the engagement team) and from the Audit Office’s system of quality management.^[65]

Audit Offices generally will have internal policies or procedures in place to respond to different signing arrangements and to clarify the respective leadership roles and responsibilities of the Signing Officer and Engagement Leader to ensure the objectives of ASA 220 are achieved. Audit Office policies or procedures will also typically specify how the Audit Office is expected to assign authority and responsibilities within the Audit Office.

Where the Signing Officer and Engagement Leader are not the same individual, the Signing Officer and Engagement Leader typically work collaboratively such that both the Engagement Leader and Signing Officer can be satisfied that the audit has been performed in accordance with the requirements of applicable Auditing Standards^[66] and Audit Office policies or procedures.

Where the Engagement Leader assigned responsibility for the audit engagement and its performance in practice is not the Signing Officer for the engagement, Audit Offices may consider clarifying in their policies or procedures:

1. that the Engagement Leader performs any assigned ASA 220 Engagement Partner duties and responsibilities for and on behalf of the Signing Officer;
2. that the Signing Officer remains ultimately responsible, and therefore accountable, for compliance with the requirements of ASA 220; and
3. the required actions to be taken by the Engagement Leader to assist the Signing Officer in complying with their ASA 220 responsibilities, in particular those responsibilities that the Standard explicitly requires the Engagement Partner fulfil in their personal capacity^[67] (see paragraph 154 of this GS).

For example, to assist the Signing Officer make the determination as required in paragraph 40 of ASA 220 (that is, the ‘stand-back’ provision – see paragraph 158 of this GS), it may be expected that the Engagement Leader will take steps to assist the Signing Officer in being sufficiently and appropriately involved throughout the audit engagement such that the Signing Officer has the required basis for determining that significant judgements made and the conclusions reached are appropriate, given the nature and circumstances of the engagement. Audit Office policies or procedures may require the Engagement Leader to consider:

• Inviting the Signing Officer to key planning and closing meetings and other relevant team events (for example, meetings to discuss significant issues pertaining to the audit or the public sector entity).
• Involving the Signing Officer in agreeing the treatment of significant, complex, or contentious accounting issues, or matters involving significant judgements^[68] .
• Inviting the Signing Officer to key meetings with management and those charged with governance of the public sector entity.
• Communicating how the Engagement Leader has satisfied themselves that the requirements of ASA 220 have been met.

As noted in paragraph 145 of this GS, a Signing Officer may need to obtain information from the engagement team or from the Audit Office’s system of quality management to make a required decision or judgement under ASA 220. Audit Office policies or procedures may address the matters required to be communicated to the Signing Officer by the Engagement Leader, including the timing and form of such communication. Communication may be in the form of briefings, internal memorandums, written confirmations and signoffs prepared by the Engagement Leader to demonstrate that they have complied with applicable Auditing Standards and Audit Office policies or procedures; that their involvement in the engagement has been sufficient and appropriate throughout; and that the work performed by less experienced members of the engagement team has been directed, supervised and reviewed in accordance with the requirements of ASA 220 and Audit Office policies or procedures. The form and content of such communication will be influenced by the nature and extent of the audit work assigned to the Engagement Leader.

Audit Office policies or procedures may include a requirement for the Engagement Leader to communicate matters relevant to the Signing Officer’s conclusions about the audit, for example, to provide certain internal assurances and information to assist the Signing Officer in undertaking their final review and to provide clearance for the recommended auditor’s report to be signed and issued. This may be in the form of an overall summary memorandum describing the work performed and the results thereof, which may include information and assurances such as:

• Confirmation that the audit has been completed and that the audit file has been reviewed and all issues resolved.
• Confirmation that relevant ethical requirements, including those related to independence, have been fulfilled.^[69]
• How matters affecting the overall audit strategy and audit plan have been addressed.
• Significant matters arising on the audit and, in particular, consultation and conclusions on matters that were difficult or contentious.
• How any differences of opinion have been addressed and resolved.
• Results of the procedures performed by the engagement team on significant areas of the engagement, including where significant judgements were involved.
• Notification that the EQR (where appropriate) has been completed.^[70]
• Key financial results/analytics.
• The significance and disposition of corrected and uncorrected misstatements identified during the engagement.
• Evidence that the financial report has been reviewed by the Engagement Leader (attach financial report for Signing Officer to review).
• Confirmation that the financial report complies in all material respects with accounting and financial reporting standards.
• Evidence that the Management Representation Letter has been reviewed by the Engagement Leader.
• Confirmation that sufficient appropriate audit evidence has been obtained to support the conclusions reached and for the auditor’s report to be issued.
• Recommended draft auditor’s report and Auditor’s Independence Declaration (where applicable) (attach for Signing Officer to review).
• Significant matters communicated or expected to be communicated to management and those charged with governance or regulatory authorities.
• Information about instances of non-compliance with laws or regulations.
• Issues with sector wide implications, or other sensitive issues which may be of interest to the Parliament, Executive Government or the community.

In implementing Audit Office policies or procedures applicable to the audit engagement, the Engagement Leader exercises professional judgement and is influenced by the nature and circumstances of the engagement and any changes during the engagement, to determine whether to design and implement responses beyond those set forth in policies or procedures, to meet the objectives of ASA 220.

Where the Signing Officer is not also the Engagement Leader in practice, the Signing Officer may have a reduced involvement in the audit due to the role of the Engagement Leader. In these circumstances, the Signing Officer may be able to rely on the Engagement Leader to perform certain key duties and responsibilities that may have been assigned to the role in accordance with the requirements of ASA 220 and Audit Office policies or procedures.

ASA 220^[71] explicitly identifies requirements or responsibilities that need to be fulfilled by the Engagement Partner personally, and clarifies that the Engagement Partner may need to obtain information from the firm (Audit Office) or from other members of the engagement team, to fulfil the requirement (that is, to personally make the required decision or judgement).

To enable the Signing Officer to comply with the requirements of ASA 220, Audit Offices may consider specifying in their policies or procedures:

1. the requirements under ASA 220 that expressly needs to be fulfilled by the Signing Officer in their personal capacity;
2. the information to be provided to the Signing Officer to enable them to make the required decisions or judgements expressly required to be fulfilled under ASA 220 in their personal capacity. This will include information compiled by the Engagement Leader and relevant information from the Audit Office’s system of quality management;
3. the additional procedures to be undertaken by the Signing Officer to obtain the necessary assurances that the Engagement Leader has completed their assigned duties and responsibilities in accordance with applicable Auditing Standards, Audit Office policies or procedures and applicable legal and regulatory requirements, and can be relied upon by the Signing Officer; and
4. the minimum additional procedures to be undertaken by the Signing Officer, to enable the Signing Officer to take overall responsibility for:
   1. the audit engagement and its performance (including overall responsibility for managing and achieving quality on the audit engagement); and
   2. the auditor’s report being appropriate in the circumstances, and to sign and issue the auditor’s report.

In circumstances where the Signing Officer for the engagement is not also the Engagement Leader in practice, Audit Offices may consider clarifying in their policies that, in applying ASA 220^[72] , the Signing Officer continues to be responsible overall for managing and achieving quality on the audit engagement by:

1. taking responsibility for creating an environment for the engagement that demonstrates the Audit Office’s commitment to quality and expected behaviour of engagement team members; 
2. being sufficiently and appropriately involved throughout the engagement in accordance with the requirements of ASA 220 (see paragraphs 157-159 below); and
3. taking responsibility for the direction and supervision of the engagement team and the review of their work in accordance with the requirements of ASA 220 (see paragraphs 160-167 below).

Being sufficiently and appropriately involved throughout the audit engagement may be demonstrated by the Signing Officer in different ways, including, for example:

• being briefed by the Engagement Leader at appropriate times during the audit engagement;
• meetings or calls with the Engagement Leader to discuss identified and assessed risks, issues, findings and conclusions; and
• reviewing key audit documentation at appropriate points in time during the audit engagement.

ASA 220^[73] requires that, prior to dating the auditor’s report, the Engagement Partner perform a ‘stand-back’ to determine whether their involvement has been sufficient and appropriate throughout the audit engagement to provide the basis for determining that the significant judgements made, and the conclusions reached, are appropriate.

The Audit Office’s policies or procedures may specify the nature, timing and extent of the Signing Officer’s involvement and any reliance that may be placed by the Signing Officer on the Engagement Leader’s involvement throughout the engagement. In addition to adhering to Audit Office policies or procedures, the Signing Officer applies professional judgement to tailor the nature, timing and extent of their involvement, taking into consideration the facts and circumstances of the engagement, and considering, for example, the factors listed in paragraphs A91-A97 of ASA 220.

Under ASQM 1, Audit Offices are required to establish policies or procedures that address the nature, timing and extent of the direction and supervision of engagement teams and the review of their work. Where direction, supervision and review have been assigned to an Engagement Leader in practice, Audit Offices may consider clarifying in their policies or procedures:

1. the respective roles and responsibilities of the Signing Officer and Engagement Leader for direction, supervision and review; and
2. the information to be provided by the Engagement Leader to the Signing Officer to enable the Signing Officer, as required under ASA 220^[74], to determine that the nature, timing and extent of direction, supervision and review is:
   1. planned and performed in accordance with the Audit Office’s policies or procedures, applicable Auditing Standards and applicable legal and regulatory requirements; and
   2. responsive to the nature and circumstances of the audit engagement and the resources assigned or made available to the engagement team.

The approach to direction, supervision and review will vary from one engagement to the next, taking into account the nature and circumstances of the engagement. The Signing Officer exercises professional judgement in tailoring their approach for each engagement, taking into consideration the factors listed in paragraphs A94-A97 of ASA 220.^[75]

In applying ASA 220^[76], the Signing Officer is required to review key audit documentation at appropriate points in time throughout the audit engagement. ASA 220 does not require the Engagement Partner to review all audit documentation but to exercise professional judgment in considering, for example, significant matters and areas of significant judgements made by the engagement team. Such matters are generally considered by the Engagement Leader in consultation with the Signing Officer as appropriate. Audit Office policies or procedures may also specify certain matters that are commonly expected to involve significant judgements. Depending on the nature and circumstances of the engagement, the Signing Officer may be able to rely on the Engagement Leader’s review of ‘standard’ significant judgements and risks identified by the engagement team, and the Signing Officer will likely focus on the critical or ‘non-standard’ matters, especially those relating to potential qualifications, difficult or contentious issues, significant risks and other areas the Engagement Leader has identified as important.

In applying ASA 220,^[77] the Signing Officer is required to determine, on or before the date of the auditor’s report, through review of audit documentation and discussion with the engagement team, that sufficient appropriate audit evidence has been obtained to support the conclusions reached and for the auditor’s report to be issued. Information that may be relevant to the Signing Officer’s evaluation will depend on the facts and circumstances of the audit engagement, and may include written confirmations and sign-offs prepared by the Engagement Leader.

For example, the Signing Officer may be able to place reliance on the overall summary memorandum prepared by the Engagement Leader (see paragraph 151 above) as a basis for determining whether:

• the Engagement Leader has completed their work consistent with applicable Auditing Standards and Audit Office policies or procedures;
• the Engagement Leader and other senior members of the engagement team have been suitably involved in the planning and performance of the audit;
• EQR processes have been satisfactorily completed (where required);^[78]
• consultation and conclusions on difficult or contentious matters were appropriate and in accordance with Audit Office policies or procedures;^[79]
• any differences of opinion have been addressed and resolved in accordance with Audit Office policies or procedures;^[80]
• relevant ethical requirements, including those related to independence, have been fulfilled;^[81]
• reasonable assurance has been obtained whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and that the auditor’s report to be issued will be appropriate in the circumstances.^[82]

Where the Signing Officer places reliance on the overall summary memorandum prepared by the Engagement Leader (see paragraph 151 of this GS), this does not negate the requirement of paragraph 40 of ASA 220 for the Signing Officer to be sufficiently and appropriately involved throughout the audit (see paragraphs 149 and 157-159 of this GS).

In applying ASA 220^[83] , the Signing Officer is also required, prior to dating the auditor’s report, to review:

• the financial report; and
• the recommended draft auditor’s report, including, if applicable, the description of the key audit matters and related audit documentation.

The Signing Officer may seek to review other information, and/or request the Engagement Leader to perform additional audit procedures, if the Signing Officer considers it appropriate in the circumstances, to enable them to assume overall responsibility for the audit engagement and the appropriateness of the auditor’s report.

ASA 220^[84] provides guidance regarding documentation of the performance of the requirements of the Standard, including examples of different ways the Signing Officer’s involvement throughout the engagement may be evidenced.

An Auditor-General may be able to engage a private sector auditor or firm under contract, to perform audit engagements or audit procedures. Contracted auditors are ‘service providers’ under ASQM 1. ASQM 1^[85] includes requirements and related guidance to address the additional responsibilities and considerations when the Audit Office uses resources from a service provider.

In applying ASQM 1, Audit Offices will have policies and procedures in place to manage quality in respect of engagements performed by Audit Service Providers on behalf of the Auditor-General.

ASQM 1^[86] explains that, notwithstanding that an Audit Office may use resources from a service provider in the performance of engagements, the Audit Office remains responsible for its system of quality management.

As responsibility for quality remains with the Audit Office (statutory auditor), Audit Offices may consider establishing policies or procedures, for example, to:

• Confirm that contracted Audit Service Providers have sufficient personnel with the appropriate competencies and capabilities, including sufficient time, to deliver assigned work in accordance with contractual arrangements.
• Confirm that contracted Audit Service Providers meet the relevant ethical standards, including independence, on appointment and periodically thereafter.
• Identify and resolve potential conflicts.
• Ensure contracted-out engagements are included within the scope of the Audit Office’s quality management arrangements.
• Review all audit deliverables to be issued to those charged with governance.

Although responsibility for quality remains with the Audit Office (statutory auditor) for contracted-out engagements, this does not absolve the contracted Audit Service Provider of responsibility for their system of quality management within their firms in accordance with ASQM 1. In practice, the Audit Office (statutory auditor) may decide to request an Audit Service Provider to provide assurance regarding the system of quality management within their firm or, alternatively, may undertake procedures to confirm that an Audit Service Provider’s system of quality management is working effectively.

In applying ASA 220^[87], individuals from Audit Service Providers who perform audit procedures on the audit engagement to assist the Audit Office will form part of the Audit Office engagement team. ASA 220^[88] provides guidance on the application of policies and procedures when the engagement team includes individuals who are from another firm. ASA 220^[89] notes that ASA 600^[90], adapted as necessary in the circumstances, may provide a useful point of reference when the engagement team includes individuals from a firm external to the Audit Office in the performance of engagements.^[91]

The Auditor-General, or Audit Office employee delegated authority to sign and issue the auditor’s report on behalf of the Auditor-General, will sign and issue the statutory auditor’s report. Audit legislation may allow for the Signing Officer role to be delegated to an Audit Service Provider (private sector auditor or audit firm partner).

As explained in paragraphs 138-147 of this GS, the Signing Officer remains ultimately responsible, and therefore accountable, for the audit engagement and its performance, and for the auditor’s report that is issued. This includes taking overall responsibility for managing and achieving quality on the engagement in accordance with paragraph 13 of ASA 220.

The contracted Audit Service Provider performs assigned work in accordance with the terms of the contractual arrangement, which will generally set out the respective duties and responsibilities of the contracted Engagement Leader and relevant Audit Office staff. The contracted Engagement Leader has a contractual responsibility to the Audit Office for ensuring that the work delivered meets the expectations as agreed with the Audit Office.

The contracted Engagement Leader is responsible for ensuring that work undertaken for and on behalf of the Auditor-General is performed in accordance with applicable Auditing Standards and for managing and achieving quality for the engagement at firm level in accordance with the contract and the Audit Service Provider’s own quality management system.

The Signing Officer has reduced involvement in the audit due to the involvement of the contracted Engagement Leader. For the Signing Officer to be able to sign and issue the auditor’s report , the Signing Officer may need to undertake additional procedures and/or obtain additional information from the contracted Engagement Leader, relevant Audit Office staff and from the Audit Office’s system of quality management.

There may be circumstances where an outsourced audit has both an Audit Office Signing Officer and an Audit Office employee assigned responsibility for oversight of the outsourced audit engagement and its performance in practice. In these circumstances, the assigned Audit Office Engagement Leader and contracted Engagement Leader perform assigned Engagement Partner duties and responsibilities in accordance with Audit Office policies and procedures and the terms of the contractual arrangement, for and on behalf of the Signing Officer.

Audit Offices generally will have internal policies or procedures in place to respond to different arrangements and to clarify the respective leadership roles and responsibilities of the contracted Audit Service Provider, Audit Office Engagement Leader and the Signing Officer, to ensure the objectives of ASA 220 are achieved.

The Audit Office may develop policies or procedures to address the form or specific wording of the overall conclusion to be provided by the Audit Service Provider. In some cases, the Audit Service Provider may be required to provide draft deliverables, including a draft auditor’s report to the Audit Office.

If differences of opinion arise between the Audit Service Provider and the Signing Officer or individuals performing activities within the Audit Office’s system of quality management, the parties shall follow the Audit Office’s policies or procedures for dealing with and resolving such differences of opinion.

In circumstances where the legislative audit mandate allows for the Engagement Partner role to be fully contracted-out to a private sector auditor or firm, the appointed auditor or individual assigned responsibility for the engagement by an appointed firm, fulfils the role and responsibilities of Engagement Partner in their own right and will be responsible for the audit engagement and its performance, and for the auditor’s report that is issued, in accordance with the requirements of ASA 220. In these circumstances, the Audit Service Provider (individual or firm) issues the audit report in their own name and assumes responsibility for quality.