Audit consultancy industry is concerned with the provision of services such as business strategy planning, market outlook prediction, litigation support and various solutions in human resources, supply chain management, restructuring, technology and corporate finance. An audit firm may be organized as a partnership, a sole practitioner or as a corporation of professionals. Sole practitioners are run entrepreneurs who may employ part-time or seasonal staff to help with the workload. The most common type of audit firm is the partnership.
The organisational structure of audit firms is influenced several factors such as the volume of transactions, information technology, globalisation and the constant increase in the complexity and number of laws, regulations and standards governing entities and their auditors. An audit firm should establish a management structure that ensures effective management and operations to meet the public expectations of audits. Those appointed to the management team must possess thorough knowledge and experience of audit practice.
A consulting firm is a hybrid organization. Internal clerical and support functions are similar to those in a typical business. The consulting side of the firm uses functional management positions. The staff is allocated according to temporary project assignments. At the end of each engagement, the staff will be reallocated either returning to the available resource pool or becoming unemployed until the next engagement. Although audit and consultancy firms have various structures, most are structured thus.
• Managing Partner: A managing partner refers to a C-level executive in the consulting practice. This could be a position equal to a corporate president. Managing partners have the responsibility and authority to oversee the business divisions. Various partners in the firm will report to the managing partner.
• Partner: A partner is equivalent to a divisional president or vice president and is responsible for generating revenue. Their role is to represent the organization and provide leadership to maximize income in their market segment. Partners are required to maintain leadership roles in professional organizations and to network for executive clients. The partner and all lower managers are responsible for professional development of the staff.
• Engagement Manager: This is a director-equivalent position with the responsibility of managing the client relationship. The engagement manager is in charge of the audit’s overall execution and the audit staff.
The engagement manager is responsible for facilitating the generation of new income opportunities from the client.
• Senior Consultant: This is a field manager whose responsibilities include leading the daily onsite audit activities, interacting with the client staff, making expert observations, and managing staff assigned to the audit.
• Consultant: This is a lead position carrying the responsibility of interacting with the client and fulfilling the audit objectives without requiring constant supervision. A consultant is often promoted demonstrating an ability to fulfill the job of senior consultant or supporting manager.
• Associates: This is usually an entry-level position. Often the individual is selected for their ambition and educational background and may be fresh out of college. Associates perform some lower-level administrative tasks as they build experience
In the interest of effective and profitable running of the firm, the following essential features must be emphasized:
• Regular communication of progress on audit assignment
• Timely communication of problem areas
• Close supervision of work of juniors seniors
• Proper planning of work and its allocation to appropriate staff
• Quality control, including evidence of work completed
• Review of work done managers and assignment partners.
Global Network Firm
The “Big Four” accounting firms Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG. They offer such services as audit, assurance, corporate finance and legal services, among others. Deloitte was the largest of the four companies and therefore the largest in the world in terms of revenue in 2018. These firms have formed international networks, such that they appear as one global audit firm despite being a network of legally independent, individual firms regulated only their country regulator. The role of global audit firm networks is to coordinate the development and enforcement of global strategies, standards, policies, and governance. For example, each affiliate of PricewaterhouseCoopers International Limited confirms annually that they are in compliance with PwCIL standards. A member firm cannot act as agent of the global network firm or any other member firm, cannot obligate the global network firm or any other member firm, and is liable only for its own acts or omissions and not those of the global network firm or any other member firm.