Documentation

Question 1

what is the purpose of documentation?

Answer 1

• audit documentation refers to as workpapers and is the principal record of audit procedures performed, evidence obtained, and conclusions reached and to support auditor’s opinion (not client’s financial statements)
• WPs belongs to auditor not the client
• May not disclose without client’s permission or court order
• provide the principal support for the auditor’s report
• show that the accounting records agree and reconcile with the FS (NOT the support for the FS)

Question 2

what are some important requirements of documentation?

Answer 2

• audit documentation should indicate that accounting records = FS
• Documentation retention:
  + SAS Rule (nonissuers): require audit documentation be retained for at least 5 years from the report release date
  + PCAOB (issuers): require audit documentation be retained for at least 7 years from the report release date

Question 3

what is documentation completion date?

Answer 3

• the auditor is granted a certain window of time following the report release date in which to assemble (can change, add, or amend) the final audit documentation file. Existing docs must NOT be deleted, and additions to the documentation file must be documented as such.
• SAS rules (nonissuers): require the final audit documentation file to be assembled within 60 days following/after the report release date
• PCAOB rules (issuers): require the final audit documentation file to be assembled within 45 days following/after the report release date

Question 4

what are the factors affecting the nature and extent of audit documentation?

Answer 4

1. The risk of material misstatement
2. The extent to which judgement was required in performing the work and evaluating the results
3. The nature of the specific auditing procedure
4. The significance of the evidence obtained
5. The nature and extent of any problems identified
6. The need to document conclusions that may not be obvious

Question 5

Can an oral explanation be serve as sufficient support for the work the auditor perform?

Answer 5

NO. The oral explanations do not represent adequate support. It may be used to explain or clarify info contained in the audit documentation

Question 6

Some tick marks to know

Answer 6

• +- sign: if it appears in cost of assets column, it refers as traced and agreed to supporting INVOICE
• half moon and two lines crossed: if it appears showing total of the total column, it refers as FOOTED
• pie: if it appears showing total of the row, it refers as CROSS-FOOTED
• R sign: if it appears in the last cell of a table, it refers as agreed amount to the subsidiary ledger
• Infinity sign: it usually appears in the A/D column, it refers as recalculated