Audit Documentation and Communication with Those Charged With Governance

Question 1

Purpose of Audit Documentation

Answer 1

1. Supports Audit Report
2. Supports PSA and other applicable standards

Question 2

Audit Documentation

Answer 2

Record of audit procedures performed, relevant audit evidence obtained, and conclusions reached.

Question 3

Audit File

Answer 3

One or more folders or other storage media containing the records that comprise the audit documentation for a specific engagement

Question 4

Experienced Auditor

Answer 4

Individual who has practical audit experience and a reasonable understanding of:
a. Audit Processes
b. PSA
c. Business environment
d. Auditing and Financial Reporting Issues

Question 5

Form, Content, and Extent of Audit Documentation

Answer 5

Prepare the documentation so enable an experienced auditor having no previous connection to the audit to understand:
- Nature timing and extent of audit procedures performed
- The results of audit procedures performed, and audit evidence obtained
- Significant matters arising during the audit and the conclusions reached

Question 6

Factors affecting Audit documentation

Answer 6

1. Size and complexity of the entity
2. Nature of the audit procedures performed
3. Identified risks of material misstatement
4. Significance of audit evidence obtained
5. Nature and extent of exceptions

Question 7

Factors affecting Audit documentation

Answer 7

1. Size and complexity of the entity
2. Nature of the audit procedures performed
3. Identified risks of material misstatement
4. Significance of audit evidence obtained
5. Nature and extent of exceptions
6. Need to document a conclusion
7. Audit methodology and tools used

Question 8

What should be documented

Answer 8

1. Who performed the audit work and who reviewed specific audit documentation and the dfates
2. Concerning specific items tested
   a. Documents inspected
   b. Copies of entity’s records when needed to enable the experienced auditor to understand the work performed and conclusions reached
3. Any departure from a basic principle or essential procedure in the PSAs

Question 9

Documentation of New Information

Answer 9

1. When received after report date, the auditor should consider whether to perform audit procedure on the new information based on nature and significance of information
2. If new information is added to working papers, it should include:
   a. when and by whom changes were made and reviewed.
   b. Specific reasons for change
   c. Effect if any on auditor’s conclusions

Question 10

Assembly of Audit File

Answer 10

Auditor shall assemble the audit documentation in an audit file and complete administrative process of assembling the final audit file not later than 60 days after the date of the auditor’s report.

Question 11

Owner of Audit Documentation

Answer 11

Property of the Auditor and not considered as part or as a substitute for client’s records

Question 12

Retention Period for Audit Engagement

Answer 12

Prior to 2019 7 Years
Revised Retention Period at least 10 years
5 to 7 to 10

Question 13

Guidelines for Preparation of Working Papers

Answer 13

1. Heading
2. Indexing
3. Cross-Indexing
4. Tick marks

Question 14

Classification of Working Paper

Answer 14

1. Permanent Working Paper
2. Current Working Paper

Question 15

Permanent Working Papers

Answer 15

Contain information about historical data about the client that are of continuing relevance to the audit

Question 16

Example of Working Papers

Answer 16

1. Information of legal and organizational structure
2. Copies of minutes and important legal documents and agreements
3. Information concerning industry, economic environment, and legislative environment
4. Information related to understanding of client’s itnernal control
5. Copies of letters or nots concerning audit matters communicated or discussed with entity
6. Analysis from previous years of accounts with continuing importance
7. Results of analytical procedures from previous audits

Question 17

Current Working Papers

Answer 17

Working paper for current year and include all audit documentation applicable to the period under audit

Question 18

Example of Current Working Paper

Answer 18

1. A copy of financial statements
2. Overall audit strategy
3. Audit plan
4. Audit Program
5. General information
6. Working trial balance
7. Assembly sheets or lead schedule
8. Adjusting and reclassification entries
9. Audit memoranda
10. Supporting Schedule
11. Reconciliation of amounts
12. Test of reasonableness
13. Summary of procedures
14. Examination of supporting documents
15. Informational
16. Outside documentation