QB Chapter 10: Documentation Flashcards
Which three of the following are reasons why assurance providers record their work?
A To confirm the terms of the engagement
B To help the assurance team to plan and perform the engagement
C To retain a record of matters of continuing significance to the engagement
D To enable an experienced assurance provider to carry out quality control reviews
B,C,D
Confirming the terms of the engagement is done in the engagement letter and does
not constitute a reason for assurance providers to record their work.
Which three of the following should working papers show?
A The name of the client
B The date the work was planned
C The date the work was carried out
D The date the work was reviewed
E The initials of the person supervising the work
A,C,D
The answer is not option B as the details relating to the planning of the work will be
included in the planning memorandum. The answer is not option E as the initials of the
person supervising the work are not necessary, but the reviewer would initial the
working paper. The supervisor and the reviewer might be the same person, but not
necessarily.
Which two of the following are likely to be kept on a permanent audit file?
A Engagement letter
B Planning memorandum
C Review notes
D Previous year’s signed financial statements
E Current year’s draft financial statements
A,D Options B, C and E will be kept on the current year audit file.
Which two of the following statements are correct?
A Working papers belong to the assurance provider
B Working papers should be kept for the current and previous year only
C Working papers should not be made available to third parties without client
permission
D Working papers should be made available to third parties at the request of the client
A,C Option B is incorrect as ICAEW requires all firms should keep all audit working papers
for at least six years from the end of the accounting period to which they relate, so
more than the current and previous year will be kept.
Option D is incorrect as working papers belong to the assurance provider so this
decision does not belong to the client.
The assurance provider will prepare documentation in relation to the fieldwork carried out
on an assurance engagement.
For each of the following, select whether or not they are valid reasons for preparing this
documentation.
To retain a record of matters of continuing significance to future engagements
A Valid
B Not valid
To fulfil legal requirements covering assurance providers
C Valid
D Not valid
To enable quality control reviews to be carried out
E Valid
F Not valid
A,D,E
The second statement is not valid as documenting fieldwork is a professional and not a
legal requirement. The other two statements are valid
Many auditors use two types of audit file: a current audit file and a permanent audit file. For each of the following documents, select whether it is most likely to be included in the current audit file, permanent audit file or in both. Engagement letter A Current audit file B Permanent audit file C Both Audit plan D Current audit file E Permanent audit file F Both Manager review notes G Current audit file H Permanent audit file I Both
B,D,G
The engagement letter will be held on the permanent audit file. The audit plan and
manager review notes will be on the current file only
Which three of the following documents would be held on a current audit file?
A Details of the history of the client’s business
B Communications with experts
C Audit file review notes
D Copies of management accounts
E Lease agreements
B,C,D
Details of the history of the client’s business and lease agreements would be held on
the permanent audit file
For each of the following statements, select whether they are true or false.
Working papers should be stored in locked premises.
A True
B False
An auditor can destroy the audit plan relating to Jacobs Ltd for the year ended
30 June 20X3 in 20Y0.
C True
D False
Working papers belong to the client and may be stored at their premises.
E True
F False
A,C,F
Working papers belong to the auditor and should be stored securely by the auditor in
locked premises. Although ISA 230 requires documentation to be kept for a minimum
of five years from the date of the auditor’s report, ICAEW requires registered auditors
to keep all audit working papers required by auditing standards for a period of at least
six years from the end of the accounting period to which they relate.
For each of the following, select whether or not they are valid reasons for preparing audit
working papers.
To help the audit team to plan and perform the audit
A Valid
B Not valid
To enable the auditor to charge a higher fee
C Valid
D Not valid
To prove adherence to ISAs
E Valid
F Not valid
A,D,E
The second statement is not valid as there is no direct correlation between the number
of working papers produced and the audit fee charged. The other two statements are
valid.
The assurance provider will prepare documentation in relation to the fieldwork carried out
on an assurance engagement.
For each of the following, select whether or not they are valid reasons for the preparation of
such documentation.
To help in establishing this year’s overall audit strategy
A Valid
B Not valid
To help in this year’s review process
C Valid
D Not valid
To provide a record of evidence gathered to support the conclusions reached
E Valid
F Not valid
B,C,E
Not valid – fieldwork documentation does not help in establishing the audit strategy.
Valid – fieldwork documentation helps in an effective review process.
Valid – the fieldwork documentation provides a record of evidence gathered.
SAMPLE PAPER
Many auditors use two types of audit file: a permanent audit file and a current audit file. For each of the following types of information, select the appropriate file in which it will be contained. Audit strategy document A Permanent audit file B Current audit file Written representation from management C Permanent audit file D Current audit file Accounting systems notes E Permanent audit file F Current audit file
B,D,E
The permanent audit file contains documents of ongoing relevance, whereas the
current audit file contains documents and working papers that relate directly to the
audit of the current year end.
Which three of the following are advantages of automated working papers?
A They may result in substantial time-savings
B The risk of errors is reduced
C The auditor does not need to apply judgement in assessing the results
D They will be easier to review
A,B,D
Option C is not correct as computerised audit processes cannot replace the exercise of
judgement by the auditor.
Which one of the following statements is correct in respect of the minimum period, as
required by ICAEW, for which audit working papers must be retained by the auditor?
A Five years from the date of completion of the audit work
B Six years from the date of the auditor’s report
C Six years from the end of the accounting period to which they relate
D Five years from the date of approval of the financial statements by the shareholders
C Six years from the end of the accounting period to which they relate is the ICAEW
requirement.
Which one of the following statements is correct in respect of the safe custody of audit
documentation?
A While audit documentation is held on the client’s premises it is the responsibility of the
client to ensure its safe custody
B The auditor need only ensure the safe custody of audit documentation for the duration
of the audit
C The auditor must ensure the safe custody of audit documentation for at least six years
from the end of the accounting period to which it relates
D All audit documentation must be destroyed within five years of the end of the
accounting period to which it relates
C The auditor must ensure the safe custody of audit documentation for at least six years
from the end of the accounting period to which it relates.
The auditor may choose to include a number of items within their working papers.
For each of the following statements, select whether they are true or false.
Auditors may include a summary of all significant matters arising during the audit and how
they were addressed.
A True
B False
In cases where significant judgement is required, the auditor can choose to delay the
preparation of working papers in order to allow for suitable reflection.
C True
D False
Audit working papers will record matters of continuing significance to future audits.
E True
F False
A,D,E
Matters of significance should be documented for both current and future audits.
However, documentation must be prepared on a timely basis, as any delay could lead
to inaccurate working papers. The need for reflection is unlikely to benefit the auditor’s
judgement in such cases! Working papers can also be updated as and when
subsequent information/evidence is obtained.
