2340.2 Group Engagement Team Planning

Dec-2023

OAG Guidance

As described in OAG Audit 4011, although the team planning meeting(s) occurs during the planning phase of the engagement, a significant number of planning activities are undertaken in advance of the team planning meeting, and the team planning meeting(s) is where the engagement leader and team manager convey information relating to the planning activities undertaken to the rest of the engagement team for the team's understanding, input, discussion and agreement. Planning meetings are used to remind engagement team members of their role in performing a quality audit and to consider the overall audit strategy setting out the scope, timing and direction of the audit. The results of the planning activities performed, including the planning meeting(s) and the proposed audit strategy will form the basis for the detailed audit plan. As such, the team planning meeting communications and discussions, and the related documentation, provide one important element demonstrating that direction and supervision of the engagement team and the review of their work has been appropriately planned and performed, as required by CAS 220.30(a).

Purpose of team planning meeting(s)

In a group audit, the group engagement leader is ultimately responsible for the external auditor's report to be issued on the group financial statements and needs to be sufficiently and appropriately involved throughout the engagement such that they have a basis for determining whether significant judgments made, and the conclusions reached, are appropriate. In addition, the group engagement team needs to determine that the nature, timing and extent of direction and supervision of component auditors and the review of their work is both planned and performed. Planning meetings of the group engagement team and component auditors help the group engagement leader in fulfilling these responsibilities.

Setting up and managing the planning meeting(s) for the group engagement team and component auditors

The team planning meetings in a group audit can be set up and managed in any of the following ways:

Option 1: The group engagement team sets up the meeting(s)

The group engagement team sets team planning meeting agendas for the group audit with the component auditors by following the guidance in OAG Audit 4011, adapted for the circumstances of the group audit. The group engagement leader determines the attendees and has flexibility to organize planning meetings in the manner that best suits the group audit circumstances. The group engagement leader may, for example, determine that a team planning meeting between the group engagement team and key engagement team members for all component auditors of significant components is appropriate given the nature and circumstances of the engagement. Alternatively, the group engagement leader and team may set up team planning meetings with individual component auditors or groups of component auditors (e.g., based on geographical location or reporting segment). These are only examples and not meant to be an exhaustive list of options.

The group engagement leader leads the meeting(s) and communications/discussions of items on the team planning meeting agenda including, but not limited to, the discussion of the susceptibility of the entity's financial statements to material misstatement due to fraud or error (as required by CAS 315 and CAS 240). The component engagement team members' active participation in the discussions recognizes the importance of their knowledge of the component and its environment, including applicable laws and regulations.

Option 2: Component auditors set up their own meeting(s) attended by the group engagement leader and team

The component auditors set the team planning meeting agenda by following the guidance in OAG Audit 4011, adapted for the circumstances of the group audit and discuss their plans with the group engagement team. The component auditor also determines the attendees and may obtain input from the group engagement team.

The component engagement leader leads the meeting and communications/discussions, but the group engagement leader and key engagement team members actively participate in the discussions. The group engagement leader and team determine which component planning meeting(s) to attend, and which group engagement team members will attend the component auditor planning meeting(s). Attendance by the group engagement leader and team may be influenced by factors such as the significance of the component, changes in the component entity's business or environment, or information obtained regarding the component auditor member firm's system of quality management.

CAS 315 and CAS 240 require the key engagement team members to discuss the susceptibility of an entity's financial statements to material misstatement due to fraud or error. In a group audit context, key engagement team members include relevant partners and managers from significant components. As a result, at a minimum, the group engagement leader likely attends team planning meetings involving significant components and actively participates in the discussions to allow the group engagement leader to take responsibility for the planning decisions impacting the group audit made during the meeting (e.g., by asking probing questions, sharing pertinent information gathered either from client discussions or other sources, sharing their points of view based on their experience with the client, industry, regulatory environment). While the component auditor sets up and leads the meeting(s), the group engagement leader leads and is ultimately responsible for the discussion of the susceptibility of the entity's financial statements to material misstatement due to fraud or error (as required by CAS 315 and CAS 240) with key engagement team members, but invites input of the component engagement leader and team to share their insights on identifying and assessing risks of material misstatement, based on the component auditors' knowledge of the component and its environment.

The group engagement leader may determine, based on the facts and circumstances of the group audit, whether a combination of the options above is appropriate (i.e., for some components the group engagement leader and team set up team planning meeting(s) with component auditors and for others the group engagement leader may attend the component auditor's team planning meeting(s)). Where the group engagement leader does not attend team planning meeting(s) of component auditors, the group engagement leader needs to direct and supervise the work of the component engagement leader and review their work (in order to comply with CAS 220.15). As a result, the group engagement leader needs to undertake further actions or procedures to determine that the communications and discussions take place as necessary (supported by appropriate documentation) to enable the group engagement leader to take overall responsibility for them. These actions or procedures may include:

• Holding a planning discussion between the group engagement leader and the component engagement leader in advance of the team planning meeting to discuss the meeting topics (i.e., the group engagement leader's direction of the component engagement leader);

• A debrief discussion between the group engagement leader and the component engagement leader after the meeting to review outcomes and/or future actions (i.e., the group engagement leader's supervision of the component engagement leader and review of their work); and

• The group engagement leader reviewing the minutes or documentation of the meeting (i.e., the group engagement leader's review of the component engagement leader's work).

Further guidance on this topic is provided in OAG Audit 4011.