Direct Engagement Manual

COPYRIGHT NOTICE — This document is intended for internal use. It cannot be distributed to or reproduced by third parties without prior written permission from the Copyright Coordinator for the Office of the Auditor General of Canada. This includes email, fax, mail and hand delivery, or use of any other method of distribution or reproduction. CPA Canada Handbook sections and excerpts are reproduced herein for your non-commercial use with the permission of The Chartered Professional Accountants of Canada (“CPA Canada”). These may not be modified, copied or distributed in any form as this would infringe CPA Canada’s copyright. Reproduced, with permission, from the CPA Canada Handbook, The Chartered Professional Accountants of Canada, Toronto, Canada.

How to Use the Direct Engagement Manual
Dec-2022

Objective of the manual
Organization of the manual
Summary of sections in the manual
Terms used in the manual

This Direct Engagement Manual applies to all performance audits and special examinations unless otherwise identified in the practice-specific boxes that appear in each section.

Objective of the manual

The objective of this Direct Engagement Manual is to provide auditors at all levels with information on the conceptual foundation of audits, as well as an overview of how audits should be selected, planned, conducted, and reported.

The manual contains

  • applicable Chartered Professional Accountants of Canada (CPA Canada) assurance standards;
  • policies at the Office of the Auditor General (OAG); and
  • guidance on how to apply the standards and policies.

CPA Canada assurance standards. Compliance with these standards is required. The standards are included to help auditors understand why certain processes must be followed.

OAG policies. Compliance with OAG policies is required. OAG policies are intended to help auditors comply with applicable direct engagement standards and to communicate legal and other requirements.

Guidance. The guidance in the manual explains how standards and policies apply to the Direct Engagement practice. The guidance sets out the steps and procedures to facilitate compliance with the standards and policies. The manual should be used in conjunction with the audit working paper software, the OAG’s electronic tool for documenting audit work.

Audit Working Paper Software. The audit working paper software contains detailed procedures and templates for each step of an audit. Links are provided from the audit working paper software to the manual (referred to as “OAG Audit” and a section number) wherever appropriate.

Organization of the manual

The Direct Engagement Manual incorporates the components of OAG’s system of quality management, which is designed to be compliant with the Canadian Standard on Quality Management 1 and 2 (CSQM 1 and CSQM 2) and with CSAE 3001.

Each manual section contains subsections that discuss a specific audit requirement, process, or step.

Summary of the sections in the manual

Section 100 provides an overview of Direct Engagements at the OAG.

Section 1000 covers key audit principles, such as ethical requirements, professional judgment, skills and techniques, audit evidence, job rotation, audit documentation, and review of audit work.

Section 1500 covers audit selection and explains the process for maintaining knowledge of the business, selecting performance audit topics, and causing/carrying out a special examination.

Section 2000 addresses overall engagement management considerations, including managing an audit as a project, the importance of selecting significant areas to audit, communication with the entity, access to information, and the consultations that need to occur during the course of an audit.

Section 3000 sets out the initial engagement considerations and explains the terms under which the OAG undertakes an audit, preconditions for a direct engagement, auditor independence, and the roles of the engagement leader, team members, internal specialists, and the engagement quality reviewer.

Section 4000 covers the planning process for Direct Engagement, including the development of the audit strategy and the audit programs, evidence-gathering methods, and risk, and internal controls assessment.

Section 7000 covers the examination phase of direct engagements, including the initial drafting of the audit report, and the evaluation of the sufficiency and appropriateness of audit evidence.

Section 8000 describes the reporting phase for direct engagements up to the tabling date for performance audits or up to the transmission of the report to the board of directors for special examinations.

Section 9000 covers post-audit activities, including the finalization of the audit file, post-audit surveys and post-tabling activities for performance audits.

Section 10000 includes requirements related to risk considerations and responses to risk, as well as unmodified and modified conclusions specific to limited assurance engagements.

Terms used in the manual

The CPA Canada assurance standards use wording that applies to the private sector context, such as “firm” (interpreted as the OAG), “engagement partner” (interpreted as the engagement leader), “responsible party” (interpreted as the audited entity), and “practitioner” (interpreted as an audit team member), and “practitioner’s report” (interpreted as the audit report). A glossary is provided at the beginning of the manual.