Competence
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GAO-03-673G Government Auditing Standards > Chapter 3 General Standards > Competence
3.39 The general standard related to competence is:
The staff assigned to perform the audit or attestation engagement should collectively possess adequate professional competence for the tasks required.
3.40 This standard places responsibility on audit organizations to ensure that each audit or attestation engagement is performed by staff who collectively have the knowledge, skills, and experience necessary for that assignment. Accordingly, audit organizations should have a process for recruitment, hiring, continuous development, and evaluation of staff to assist the organization in maintaining a workforce that has adequate competence. The nature, extent, and formality of the process will depend on various factors such as the size of the audit organization, its work, and its structure.
3.41 The competencies discussed below apply to the knowledge, skills, and experience of audit organizations and not necessarily to each individual auditor. An audit organization may need to employ personnel or hire specialists who are knowledgeable, skilled, or experienced in such areas as accounting, statistics, law, engineering, audit design and methodology, information technology, public administration, economics, social sciences, or actuarial science.
Technical Knowledge and Competence
3.42 Audit organizations should ensure that staff members assigned to conduct an audit or attestation engagement under GAGAS should collectively possess the technical knowledge, skills, and experience necessary to be competent for the type of work being performed before beginning work on that assignment. Staff members should collectively possess
a. knowledge of GAGAS applicable to the type of work they are assigned and the education, skills, and experience to apply such knowledge to the work being performed;
b. general knowledge of the environment in which the audited entity operates and the subject matter under review;
c. skills to communicate clearly and effectively, both orally and in writing; and
d. skills appropriate for the work being performed. For example:
(1) if the work requires use of statistical sampling, the staff or specialists should include persons with statistical sampling skills;
(2) if the work requires extensive review of information systems, the staff or specialists should include persons with information technology skills;
(3) if the work involves review of complex engineering data, the staff or specialists should include persons with engineering skills; or
(4) if the work involves the use of specialized audit methodologies or analytical techniques, such as the use of complex survey instruments, actuarial-based estimates, or statistical analysis tests, the staff or specialists should include persons with skills in those methodologies or techniques.
Additional Qualifications for Financial Audits and Attestation Engagements
3.43 Auditors performing financial audits should be knowledgeable in generally accepted accounting principles (GAAP) 1 and the AICPA’s generally accepted auditing standards for field work and reporting and the related Statements on Auditing Standards (SAS), and they should be competent in applying these standards and SASs to the task assigned. Similarly, when performing an attestation engagement, auditors should be knowledgeable in the AICPA general attestation standard related to criteria, and the AICPA attestation standards for field work and reporting and the related Statements on Standards for Attestation Engagements (SSAE), and they should be competent in applying these standards and SSAEs to the task assigned.
3.44 Auditors engaged to perform financial audits or attestation engagements should be licensed certified public accountants or persons working for a licensed certified public accounting firm or a government auditing organization. 2 Public accountants and accounting firms meeting licensing requirements should also comply with the applicable provisions of the public accountancy law and rules of the jurisdiction(s) where the audit is being performed and the jurisdiction(s) in which the public accountants and their firms are licensed.
Continuing Professional Education
3.45 Auditors performing work under GAGAS, including planning, directing, performing field work, or reporting on an audit or attestation engagement under GAGAS, need to maintain their professional competence through continuing professional education (CPE). Therefore, each auditor performing work under GAGAS should complete, every 2 years, at least 80 hours of CPE that directly enhance the auditor’s professional proficiency to perform audits and/or attestation engagements. 3 At least 24 of the 80 hours of CPE should be in subjects directly related to government auditing, the government environment, or the specific or unique environment in which the audited entity operates. 4 At least 20 hours of the 80 should be completed in any 1 year of the 2-year period.
3.46 CPE may include a variety of topics that contribute to auditors’ proficiency to perform audits and/or attestation engagements, such as developments in auditing standards and methodology, accounting principles, assessment of internal control, principles of management or supervision, information systems management, audit sampling, financial statement analysis, evaluation design, and data analysis. It may also include subjects related to specific fields of work, such as public administration, public policy and structure, industrial engineering, finance, economics, social sciences, and information technology.
3.47 The audit organization is responsible for ensuring that auditors meet the continuing education requirements and should maintain documentation of the CPE completed. The U.S. General Accounting Office (GAO) has developed guidance pertaining to CPE requirements to assist auditors and audit organizations in exercising professional judgment in complying with the CPE requirements. 5
3.48 External and internal specialists assisting in performing a GAGAS assignment should be qualified and should maintain professional competence in their areas of specialization but are not required to meet the CPE requirements described here. However, auditors who use the work of external and internal specialists should ensure that such specialists are qualified in their areas of specialization and should document such assurance.
1If GAAP is not the basis of accounting being used on a particular assignment, then auditors should be knowledgeable about the appropriate accounting principles used, such as regulatory accounting principles.
2Public accountants licensed on or before December 31, 1970, or persons working for a public accounting firm licensed on or before December 31, 1970, are also considered qualified under this standard.
3Although staff members must collectively possess the technical knowledge, skills, and experience necessary to be competent for the type of work being performed before beginning work on a GAGAS assignment as discussed in paragraph 3.42, individual auditors have 2 years from the date they start an audit or attestation engagement conducted under GAGAS to comply with the CPE requirements.
4Staff members not involved in planning, directing, or reporting on the audit or attestation engagement, and who charge less than 20 percent annually of their time to audits and attestation engagements following GAGAS, do not have to comply with the 24-hour CPE requirement.
5This guidance, Interpretation of Continuing Education and Training Requirements, can be found on GAO’s Government Auditing Standards Web page (/govaud/ybk01.htm).
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