1. Personnel Levels in a Typical CPA Firm
Dr. Donald K. McConnell Jr.
The University of Texas at Arlington
7/2/2019

2. Typical Personnel Levels
Partners [also principals]
Management group
Senior managers
Managers
Senior group
Supervising seniors
Seniors
Staff auditors
Staff accountants
Assistant accountants
[A horse by any other name is still a horse]
7/2/2019

3. Partners and Principals
Have final responsibility for the audit engagement
Sign the firm’s name on the audit report
In some foreign countries, partners sign their names, not the firm name, on audit report
Have final responsibility for all audit work product; however, characteristically review work papers [audit documentation] in areas of greatest audit risk
Average annual earnings for a big four partner
How do you become a partner?
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4. What Differentiates Principals from Partners?
Traditionally, principals were non CPAs, but “essentially” partner equivalents
More recently, persons seeking a better work-life balance
Typically principals:
Have fewer client responsibilities
May work seasonally, or only “x” days a week
Earn less than partners
Don’t have to put up capital, as partners must*
Don’t get to vote at partner meetings
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5. Management Group Senior managers and managers
Not on site day-to-day during fieldwork, as seniors and staff are
Fieldwork is that period when the audit team is physically on client premises conducting the audit
Management group functions:
Review work papers, after senior level review
Typically only on site when client “issues” arise, e.g. audit or accounting problems, or client wants “face time”
Preening to become partners
Do client billings, follow up with late payers, additional billings for over runs
Often on phone 25% of a work day!
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6. Senior Group Supervising seniors: New seniors:
A more experienced senior
May be senioring [in charge of] multiple audits simultaneously
More likely to senior SEC audits
New seniors:
Usually run only one job, probably a small client
This is when you truly learn how to audit!
Rather than doing parts of the audit
You oversee entire audit process
Experienced staff may senior small audits
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7. Senior Group Responsibilities
In charge of audit fieldwork
Great when you become a senior: your boss is no longer standing over you day-to-day!
Plans the audit, with manager and partner approval
Prepares audit program, based on control risk assessment
Delegates sections of the audit for staff auditors to do
Reviews work of subordinates
Senior retention issues…
First big job you senior can be frustrating: What did I do today!?
[Not generating many w/p’s anymore!]
7/2/2019

8. Staff Auditors Staff accountants Assistant accountant is entry-level
Have been through a “busy” season
Usually promoted from assistant accountant after nine months to a year and a half
“Fast-track” staff accountants often senior a very small or branch audit in as few as nine months from hiring
Audit tougher areas than assistants
Assistant accountant is entry-level
Accept that you are going to occasionally feel lost [even stupid], in the first six months
It’s just part of the learning process, and everyone goes through it!
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9. Staff Auditor Responsibilities
Testing of controls at interim, SOX controls compliance testing
Substantive audit testing of, e.g.:
Fixed assets
Inventories
Accounts Receivable
Accounts Payable
Cash
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10. Other Issues
Note there is a work paper [audit documentation] review hierarchy
To satisfy 1st std of field work
Work adequately planned
Assts, if any, properly supervised
Seniors review w/p’s and write review notes to be cleared, then manager does so, followed by partner
Cold partner (concurring partner) review
Partner or senior manager who understands the industry also reviews!
Purpose: are the Fin. Stmts. fairly presented in conformity with GAAP?
Req’d for audits of SEC clients, if CPA firm is member of SECPS of AICPA
Many firms have for all audits
7/2/2019