18-PS_Entity Meetings AS2 V12

7/25/2019 18-PS_Entity Meetings AS2 V12

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The Audit Experience AS/2

Performance SupportEntity Meetings

Throughout your career with Deloitte, you will be involved in numerous entity

meetingswhether in person, on the phone, video conerence calls, one!on!one meetings, or

with several other people" These meetings can be as ormal as the inal entity meeting to sign theinancial statements, or a #uic$ chat in the entity oices"

This perormance support aims to provide you with support, advice, hints, and tips or all entity

meetings" %t will cover live or ace!to!ace meetings irst and then go on to phone meetings"

&emember that your colleagues have vast experience meeting with the entity and will be able to

provide speciic advice or dealing with the entity sta or the engagement you are wor$ing on"

This perormance support will cover the ollowing topics 'clic$ on a lin$ to go to the topic()

T%*S +& E++E-T%.E ET%T0 1EET%S

o 3ow should % prepare or the entity meeting4

o 5hat are some tips to do during the entity meeting4

%ntroduction

Discussion

-onclusion

o 5hat should % do ater the entity meeting4

35 D *3E 1EET%S D%++E& +&1 +A-E!T!+A-E 1EET%S4

TIPS FOR EFFECTIVE ENTITY MEETINGS

How should I prepare for the entity meeting?6eore you have any meeting with the entity, you should consider)

5hy are you having this meeting4 5hat is the purpose4

o %s it to gain inormation or explanations4 % so, you should prepare a list o #uestions

beore you go into the meeting"

o %s there a regulatory reason4

5ho has called the meeting4 %s it the entity4 % you are not sure who has called the meeting,

you should as$ your ield senior"

5hat is the reason or the meeting4

o % you are unsure, then you should as$ the meeting organi7er or a brie agenda

highlighting the main points to be covered in the meeting"

o % you are the meeting organi7er, then you should send such an agenda to all o the

attendees in advance o the meeting" 3ow long in advance o the meeting this agendashould be sent will depend on entity practices and on the sub8ect matter to be

discussed at the meeting"

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o % it is a more inormal meeting then 8ust #uic$ly as$ing the meeting organi7er or

some details on what the meeting will cover will suice"

5ho will be attending the meeting4

o The attendees will give you an idea o the ormality o the meeting" % the meeting

attendees include the chie executive, managing director or inance director with theengagement partner and audit manager then it is more li$ely to be ormal" % it is

between yoursel and a sales cler$ then it will probably be less ormal"

o Depending on the purpose o the meeting, are the planned attendees appropriate to

provide the inormation and explanations you are see$ing, or should someone else bethere4

Example: If you are asking for information concerning the physical testing of

some motor vehicles, then you do not need to ask the finance director; you

would likely ask the warehouse manager.

If you are enquiring about the commercial rationale behind the opening of a

new sales office then the sales clerk is likely to be too unior a member of theentity team to have a meeting with; the managing director may be a betterattendee.

5hat is the timing o the meeting4 The meeting organi7er should schedule a time and a

place, $eeping in mind the purpose o the meeting"

o % you are the meeting organi7er, you should contact the attendees 'or their

secretary/diary holder( to ind a common time that suits all" 0ou will then need to

organi7e a room that will seat all the attendees comortably"

The ma8ority o the time, your meetings will be held with one person and you

can spea$ with them directly to ind a time that suits them" 0ou can also as$them i you can hold the meeting in their oice"

% you are organi7ing a meeting with more than one person then it is oten a

good idea to email all o the attendees with two or three alternative times and

then going with what the ma8ority o attendees preer"

o Try to organi7e the meeting at a sensible time or all involved"

% it is being held last thing on a +riday aternoon then will the entity

personnel be ocused or thin$ing about the wee$end4

% the meeting is scheduled or irst thing in the morning, will the attendees be

alert enough to contribute ully4 3ow long should the meeting be4 This depends on the amount o topics you need to cover or

the amount o #uestions you have to as$" 9se your 8udgment and common sense whenplanning how long the meeting should last"

o % you only have :; minutes and a long list o items to cover then it may be an idea to

prioriti7e the list so that you cover what is most important"

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o As mentioned above, sending an agenda with your meeting re#uest will help to $eep

your meeting on trac$"

3ave you gathered all the inormation you can beore having the meeting4

o ne o the top entity complaints is the audit team as$ing or inormation that has

already been provided" 0ou should review the inormation the entity gave to the ieldsenior at the start o the audit, chec$ that other members o the team have not already

as$ed or it on a related area, and see i it is in the prior year ile"

Example: if you are auditing property, plant, and equipment, the entity may

have already given the fixed asset register, fixed asset movement schedule,

asset addition invoices, and disposal authori!ation forms to the field senior.

n any section, beore you approach entity sta or inormation, chec$ to see i it has

already been received by the audit team"

o During the planning stage o an audit, the ield senior or audit manager will oten

send the entity a list o common schedules that the audit team will need" This helps

the entity prepare or the audit visit and reduces any wait time between as$ing theentity or inormation and being able to start testing"

0ou should as$ the ield senior i such a list has been sent 'sometimes called s expectations o the meeting and will help you stay on trac$ getting the

inormation you re#uire" % the meeting is inormal then you do not need to circulate it"

What are some tips to do during the entity meeting?

?( %ntroduction Start by introducing yoursel and the rest o the Deloitte attendees and than$ing the attendees

or their time" As a reminder, it is a good idea to reiterate the reason or the meeting and

#uic$ly read the agenda topics"

Example: "ood morning, I#m $rthur "room here with %eloitte for the audit

and this is &oshiko 'orito, also from %eloitte, who will be taking minutes of

the meeting.

I would like to thank all of you for being here today.

(e are here to talk about your inventory system and the changes that youhave implemented this year. (e are also going to go through the observations

that we made during the inventory count we attended, before discussing the

inventory accounting policy going forward.

2( The discussion

0ou need to ma$e sure that you document the meeting, e"g", ta$e notes o the discussion"

This could mean bringing another team member with you i it is a large meeting and you donot thin$ you will be able to participate and document at the same time"

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o 0ou will use these notes as your documentation o the meeting" otes will also

reduce the chance o you orgetting something the entity told you in the meeting and

having to go bac$ and as$ again, which can be very embarrassing"

o 3aving someone else ta$ing notes will allow you to concentrate ully on the meeting,

and not on ma$ing sure you are writing everything down" % you try to do both you

may miss the next comment as you are still noting down the previous one@

o 1a$e sure that you introduce the note ta$er and explain what they are doing as per

the example above"

+ollow the agenda you have set and do not allow yoursel to be side trac$ed, especially i you

only have a short time with the entity"

o This will prevent you rom going o on a tangent i the entity brings up something

else interesting but not directly related to why you are having the meeting" 0ou

should note down this inormation and then come bac$ to it later"

Example: &hank you for bringing that to my attention. I am aware that we

have a limited amount of time to speak about provisions, so I will come backand discuss this with you another time if that is acceptable.

o The entity sta may also go o onto another topic" %t can be diicult to bring them

bac$ on course politely, but you need to ma$e sure you cover your initial ob8ective or

the meeting"

Example: If the entity is talking about a personal matter then try a version of

the following, )It sounds like you had a lovely holiday, I#m looking forward to

mine next month. I#m conscious of the time we have left in this meeting, so

we#d better get back to talking about accounts receivable*

6e open and riendly with the entity to build rapport" 5hen as$ing or evidence to bac$ upan explanation, the entity could wonder why you are not ta$ing their word at ace value" 6ybeing positive and explaining our audit documentation re#uirements, you can $eep the

meeting running smoothly"

9se positive body language throughout the meeting" Smile at the attendees and maintain eye

contact with whoever is spea$ing" 0ou should also nod in agreement with the points theyma$e, and lean orward to show attentiveness" Do not cross your arms or repeatedly loo$ at

your watch, as this may seem li$e you are bored or annoyed with what is happening"

isten and understand what the entity is telling you"

o % you are not sure about something, then do not be araid to as$ the entity to clariy

what you have 8ust been told" This is preerable to having to hold another meeting togo over it again"

o 9se your proessional s$epticism and do not let the entity da77le you with complex

explanations that do not ma$e sense" Do not be araid to probe urther into theexplanation, as this is what it means to apply proessional s$epticism" % you do not

understand it, then you will not be able to document it correctly, and your ield senior

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will as$ you to get urther explanations" This will mean re!visiting the entity

personnel and they may not be happy about that"

Example: If the entity starts to explain their depreciation policy and it seems

unnecessarily complicated.

Entity:)(e have three asset classes and split each one further. +and -uildings is split between land and buildings, ffice Equipment is split

between furniture and computers, and /ehicles are split between cars andvans. Each asset class split has a separate depreciation rate and a different

rule as to whether we charge a full year of depreciation in the year of

purchase or sale, or calculate it on a monthly basis.*

You:)0lease could you go through each asset class split explaining what theseparate depreciation rates are and why you have allocated that rate to that

asset class. 1ould you then please talk me through which depreciation charge

policy you are using for each asset class split and why you have chosen tocalculate it in that way.*

Entity:)(ell it#s all discussed in the financial statements so can#t you ust

read it there2 I don#t want to have to go through it now.*

You:)I appreciate the time you#re giving me here and I will, of course, check

the financial statements but I would really appreciate your taking the timenow to go through each as, while I will be able to get the depreciation rates

from the accounts, I won#t be able to understand the reason behind the

different rates and policies.

I will make sure I take detailed notes so that we won#t have to go over it fromscratch again next year; this will save time in the long run.

1ould we start with land first please.*o Do not 8ust accept what the entity is telling you, you must as$ or evidence to support

the explanations given to you" This evidence could be an invoice, board minutes,

remittance advice, new contracts, etc", depending on the explanation"

Example: If the entity is telling you that payroll costs have risen by 34, then

ask to see the approved board meeting minutes that support this raise asevidence.

If the entity is saying the accounts receivables are being paid faster due to the

appointment of a new credit controller in $pril, then ask to see the contract

appointing the new member of staff.

5ou could ask to see aged debtors# reports for the two months before and afterthe appointment to see the change in payment speed.

5ou could also ask to meet the new credit controller and speak with him

directly about the work he6she does.

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o Evaluate what the entity is saying" Thin$ about the commercial rationale behind the

answer, and whether the answer ma$es sense when thin$ing about the audit as a

whole, not 8ust the area you are currently testing"

Example: If the entity has purchased a new, larger fleet of delivery vehicles

after losing its top three customers, does it make business sense2 (hy would

the entity need to deliver more goods when it is selling less2 It could be thatthe old delivery vehicles kept breaking down and costing money, and the new

vehicles are more cost effective, but you would want to ask why.

If this were the reason, you would want to check that the old delivery vehicles

have been disposed of properly, and that these disposals have been reflected

in the property, plant, and equipment balances.

o Summari7e your understanding o what you have 8ust been told" This way, any

miscommunication can immediately be corrected and i there is anything that youhave not properly understood, it will become clear when you try to tal$ about it@

As$ open #uestions and do not try to anticipate the answers" 0ou will get more inormationthis way and could ind out about matters that you had not thought o previously, but that are

relevant or the audit"

o pen #uestions are #uestions you cannot get a Byes> or Bno> answer to" They start

with Bwho>, Bwhen>, Bwhy>, Bwhat> and Bhow>"

Example: 7%id you change your accounts payable credit terms2# is a closed

question to which the entity could simply answer yes or no. 5ou would then

need to ask further questions to get the explanation you need.

7(hy did you change your accounts payable credit terms2# is an open

question to which you will get a more detailed answer. &his will allow the

entity to elaborate without your having to ask many questions and will makethe meeting feel more like a discussion than an interrogation.

o nce you have as$ed your initial opening #uestion, you can move on to more probing

#uestions" This allows you to ollow rom your initial open #uestion to get more

detail or inormation"

Example: )5ou mentioned that you changed the credit terms as you felt they

were too long at 89 days. ow did you decide 3 days as the optimum creditterm2*

o nce you have inished probing, you can move on to closed #uestions to inish your

line o in#uiry" Example: )$re you satisfied that the move to 3 credit days has been

successful2*

o +inally, you will move on to chec$ #uestions where you will reiterate the inormation

you have received to conirm your understanding with the entity"

Example: )


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paying on the last day and this was adversely affecting your cash flow. 5ou

did not move to =9 days as you felt this would have been too great a change

and would have upset your customers.

&he move to 3 days has been successful and your cash flow has improved. Isthat a correct summary of our discussion2*

This is called the interview unnel and you may ind it a helpul techni#ue to use in

your entity meetings"

:( -onclusion

o 1anage the entity>s expectations by than$ing them or their time and explaining that your wor$

will be reviewed by the ield senior, audit manager, and/or engagement partner, so you may need to come

bac$ to as$ them or urther clariication" This will help to avoid any annoyance on the entity>s partC i you

do have to as$ them again, they cannot say you did not warn them@

What should I do after the entity meeting?

5rite up the notes ta$en during the meeting and integrate them into the audit ile" % it has

not been documented, and is not on ile, then it is as i it has not been done" 0ou may ind

the


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*lan where you are going to ma$e the call in advance"

o 0ou should try to be in a separate room rom the rest o the audit team so that there is

no bac$ground noise that will ma$e it diicult to carry on the conversation"

o % the call is going to be on a cellular mobile phone, then ma$e sure that you will have

good reception so that the call does not cut out" 1a$e sure your phone is charged@o % using a landline or conerence phone, ensure that the e#uipment is wor$ing beore

the call is going to ta$e place so that you have time to get new e#uipment i there are

any problems"

During the phone call

As$ everyone to have their phones on mute i they are not spea$ing" This will reduce any

bac$ground noise that could ma$e it diicult to hear the conversation"

&emember to spea$ clearly and slightly slower than normal so that everyone can understand

you" This is important on calls where the line may not always be very clear"

&eer to *erormance Support*hone Eti#uette or additional guidance on phone conversations"

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Note that this performance support does not replace the AAM. It should be read in conjunction with theapplicable AAM topics, as the manual states the requirements of our audit approach and provides furtherguidance.

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18-PS_Entity Meetings AS2 V12

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Transcript of 18-PS_Entity Meetings AS2 V12