Firm Structure

It is difficult to generalize about the organization of accounting firms because each one has its own structure and no two are exactly alike. Some multioffice firms are organized by groups or regions, with one partner designated overall respon­sibility for the practices in each group or region. The group or regional partners may report to a number of vice chairmen or other designated partners. Each practice office is headed by a partner, often called the managing pertner or partner in charge of the office, who is responsibile for day-to-day operations. Within each practice office, there may be separate units for aufiting, tax, MAS, and perhaps one or more specialized practice areas. In addition to professional personnel, each practice office may have an administrative staff to handle personnel management, including recruiting, and to support the office's accounting and reporting function.

In addition to their practice offices, many large accounting firms have a number of specialized departments, usually organized as part of a national office, that provide support to the practice. Example of such resources groups are industry specialization, marketing and planning, professional education, and accounting and auditing policy setting, research, and con­sulting. Firms that practice in different countries are further organized under an international structure usually governed by a committee of representatives from the various member firms or geographic areas.

The Audit Engagement Team. Each audit is staffed by a team headed by a partner who signs the audit report and is ultimately responsible for the audit and its results. Especially on large or complex engagements, there may be more than one partner, or the partner may delegate many functions to one or more managers; however, one partner retains responsibility for the quality of the audit and thus should be actively involved in its planning and in evaluating the results, as documented and summarized by the members of the engagement team. The team usually includes a manager (or more than one on a large engagement) and other personnel with varying degrees of experience and professional expertise and competence. Firms establish staff classifications through which employees prog­ress and policies that set forth the responsibilities 6f audit personnel on each level. While these responsibilities vary from one firm to another, the typical functions and duties of each classification can be described generally.

Partner. The partner has primary responsibility for accounting and auditing services and is usually the direct contact with the client. The partner is responsible for all decisions made in the course of the engagement, including those about the scope of services, the audit strategy, and the resolution of significant accounting and auditing technical issues. In short, the partner is responsible for ensuring that the audit has been planned, conducted, and reported on in accordance with the firm's polit\cies and professional standards.

As noted firms that are members of the AICPA's SEC Practice Section are required to assing a second, or concurring, partner on SEC engagements to provide additional assurance that those objectives are achieved. Because of the perceived benefits of such additional partner review, many firms assign a concurring partner to other engagements as well.

The concurring partner on an engagement generally assesses the audit strategy, including procedures to be performed in sensitive or highrisk areas, and may suggest additional matters to be addressed or recommend ways of enhancing audit effici­ency. The concurring partner reviews the draft audit report, related financial information and disclosures, and, where applicable, published reports and filings to be made with the SEC and other regulatory bodies. In some circumstances, the concurring partner's review may be more detailed and include inquiring of members of the engagement team and reviewing working papers to deteatjrnine that the scope of auditing procedures and related documentation comply with the firm's policies and professional standards.

Manager. Under the direction of a partner, a manager is responsible for administering all aspects of an engagement, including planning and coordinating activities with client personnel, delegating duties to team members, coaching them, supervising and reviewing their work, controlling engagement time and expenses, and overseeing billings and collections. A manager is expected to have attained a degree of technical competence in accounting and auditing sufficient to ensure that an audit complies with all applicable professional standards and firm policies. The manager is also responsible for keeping the partner informed of all significant developments throughout the audit. Among other things, the manager is other delegated the responsibility for reviewing the report to management covering control structure related matters, the financial statements first in draft from and then in final form, the documentation of the engagement, and proposed changes in the audit program.