Lead Auditor Responsibilities and Division of Reporting Responsibility

In the planning phase, what is the primary responsibility of the engagement partner regarding other auditors?

To determine if they are in fact the lead auditor for the engagement.

What is the primary role of the lead auditor concerning other auditors in an engagement?

Supervising the other auditors involved in the engagement.

Referred-to Auditor

An auditor with whom the lead auditor chooses to divide responsibility by referencing them in the audit report.

What is the primary purpose of referring to other auditors in the audit report?

To inform the user that the lead auditor is dividing responsibility for the audit

What are the two general categories of factors an engagement partner considers when determining lead auditor status?

Qualitative and quantitative factors.

In determining lead auditor status, how are quantitative factors typically measured?

By the percentage of the consolidated financial statements audited by the firm.

How does the importance of a business unit affect the determination of the lead auditor?

Auditing more important business units qualitatively supports a firm's status as the lead auditor.

Regarding supervision, what distinguishes the lead auditor from other auditors?

expected to perform more extensive supervision than the other auditors.

Under the PCAOB "bright line" test, a firm is typically not the lead auditor if a referred-to auditor audits more than _____ of assets or revenues.

50%

What specific audit procedure must a lead auditor perform regarding the information provided by a referred-to auditor?

Evaluate the consolidation or combining of that information into the company's financial statements.

In what form must a lead auditor communicate the plan to divide responsibility to the referred-to auditor?

In writing.

What written representations must the lead auditor obtain from a referred-to auditor regarding professional standing?

That they are independent under SEC and PCAOB requirements and licensed to practice.

What regulatory knowledge must the referred-to auditor be familiar with according to the lead auditor's requirements?

financial reporting framework and the standards of the PCAOB and SEC.

When must a referred-to auditor be registered with the PCAOB?

if they play a substantial role in the preparation of the audit report.

If a business unit uses a framework different from the company (e.g., IFRS vs. GAAP), what must be audited?

conversion of the information from that unit's framework to the consolidated framework.

Who is responsible for auditing the conversion of financial information between different reporting frameworks?

Either the lead auditor or the referred-to auditor.

What should the lead auditor do if they have concerns about the qualifications of a referred-to auditor?

Perform the audit procedures for that business unit themselves instead of dividing responsibility.

If a modified opinion is issued due to an inability to divide responsibility, what must be disclosed?

The magnitude of the portion to which the modified opinion extends.

If a referred-to auditor's report contains a modified opinion, what is the lead auditor's responsibility?

Make reference to that departure or explanatory language in their own report.

In an audit report with divided responsibility, the Opinion section typically begins with the phrase "Based on our audit and the report of _____."

firm [Name of Referred-to Auditor]

In which section of the audit report does the lead auditor state they believe the other auditor's report provides a reasonable basis for the opinion?

Basis for Opinion section.

What happens near the end of the audit if the lead auditor develops concerns about the referred-to auditor's qualifications or compliance with PCAOB standards?

The lead auditor cannot divide responsibility and must perform the audit procedures on that business unit themselves

If late concerns arise but the lead auditor lacks the time to perform the necessary procedures themselves, what action must be taken?

The lead auditor must issue a modified opinion and disclose the magnitude of the portion to which the modification extends