21. Audit documentation Flashcards
What is audit documentation?
It is a written record of audit procedures performed, evidence obtained and conclusions reached by auditor.
What is the purpose or benefit of audit documentation?
It provides an evidence that:
auditor has appropriate basis for opinion in audit report and achievement of overall audit objectives.
audit is planned and performed in accordance with ISAs and regulatory requirements.
It also helps in:
assisting engagement team in planning and performance.
enable quality control reviews.
retain a record of matters of continuing significance to future audits.
What is ownership and retention of audit documentation?
Audit documentation is not a part of accounting record. It is the property of auditor. However, auditor is also required to keep them in safe custody and ensure confidentiality.
Each firm should establish its own policies and procedures for retention of documentation. The minimum period is at least 5 years from date of auditor’s report or group auditor’s report whichever is later.
What is audit file?
These are the folders or other storage media in physical or electronic form containing audit documentation for whole engagement.
What are the contents of audit file?
The contents depend on nature, size and complexity of an entity but generally include:
Documentation of internal control system,
Audit plan for each area,
Significant issues identified,
Auditor’s communications, etc
What is cumulative error schedule?
It is a summary of misstatements which auditor has identified during the audit but these have not been corrected by management. Auditor builds up this schedule as audit moves on and compares with materiality level while expressing his opinion on financial statements.
What is experienced auditor principle?
Audit documentation should be self-explanatory which means that audit documentation should be sufficient to enable an experienced auditor having no previous connections with the on-going audit to understand:
Nature, timing and extent of audit procedures performed,
Evidence obtained and conclusions reached,
Significant matters arising during audit.
What are the factors which affect the form, content and extent of audit documentation?
- Risk of material misstatement
- Size and complexity of entity
- Audit methodology and tools used
- Nature and significance of:
audit procedures performed
evidence obtained
exceptions identified.
What is the information that should be included on every working paper?
- Name of audit client
- Period under audit
- Page number
- Who prepared the working paper and when
- Who reviewed the working paper and when
- Area and assertion for which the working paper is prepared……
What is the time period for assembly of audit file and what are the types of changes done?
ISAs require the firm to establish their own policies and procedures for timely completion of assembly of audit files. The appropriate time limit is within 60 days from date of auditor’s report.
Changes can only be of administrative nature which means no new procedures are performed.
Examples include:
deleting or discarding superseded documentation
sorting and cross-referencing working papers
signing off on completion checklists relating to file assembly process
What if changes are necessary after file assembly process?
Auditor may also change documents after file assembly period provided following are documented:
specific reasons for making the change
who made the changes and when
who reviewed the changes and when.
What if exceptional circumstances arise after auditor’s report?
Then the auditor shall perform new audit procedures and may add new documents:
Specific reasons for making the change
The new or additional audit procedures performed relating to event
Who made the changes and when
Who reviewed the changes and when
