Chapter 10 Documentation Flashcards
1.1 Purpose of documentation
Documentation in the form of working papers should be maintained for all assurance engagements. Working papers are prepared and retained by assurance providers in connection with the performance of the assurance engagement.
1.2 Features of working papers
Working papers should be sufficiently complete and detailed to:
- Support the conclusion drawn by the assurance provider
- Provide an overall understanding of the work undertaken
- Provide evidence of compliance with relevant laws, regulations, and professional standards.
Working papers provide a record of:
- The planning and performance of the engagement
- The supervision and review of the work performed
- The evidence obtained which the assurance provider considers necessary, and on which they have relied to arrive at their conclusion
- The quality control procedures carried out
2.1 professional judgement
Assurance providers should use their professional judgement when deciding what to document. Automated working paper packages have been developed which can make the task of documenting assurance work easier.
2.2 Audit working papers
ISA 230 provides that audit documentation must be sufficient to allow an experienced auditor with no previous connection with audit to understand audit work performed, the evidence obtained, significant matters arising, and conclusions reached.
Working papers should show the name of client, objective, reporting date, file reference, source of information, sample size, name of preparer and date, work performed, name of reviewer and date, results and conclusions drawn, subject of working paper and analysis of errors.
2.3 Types of audit file
Permanent audit file:
- Matters of a permanent or semi-permanent nature
- Suitable indexed
- Prepared at the commencement of the initial audit for the client
- Reviewed and updated at the commencement of subsequent audits for the same client
Current audit file:
- Relate primarily to the set of accounts or statements being audited
- Suitably indexed
- Prepared for the client on each occasion an audit is performed
3.1 Safe custody and retention
Safe custody of working papers is important as assurance work must be kept confidential, paper documents should be kept in a secure location and electronic documents should be protected using suitable security measures.
The duration of holding working papers is a matter of judgement, although the ICAEW requires all firms to have a document retention policy and registered auditors should keep all audit working papers for at least six years from the end of the accounting period to which they relate.
4.1 Issues of ownership and rights of access
Working papers created by the assurance provider:
- Belong to them as they were created in an independent capacity for their own use
- Kept confidential
- May be shown to the client at their discretion
- Should not be shown to a third party without their client’s permission
Any reports created as output to an assignment belong to the client once they have been issued
