Terms used in SA 230
1) Audit documentation – The record of
a) audit procedures performed,
b) relevant audit evidence obtained, and
c) conclusions the auditor reached (terms such as “working papers” or “workpapers” are also sometimes used).
2) Audit file – One or more folders or other storage media, in physical or electronic form, containing the records that comprise the audit documentation for a specific engagement.( Types:- Permanent Audit file & Temporary Audit File)
Objective of SA 230 Audit Documentation
The objective of the auditor is to prepare documentation that provides:
1) A sufficient and appropriate record of the basis for the auditor’s report; and
2) Evidence that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements.
Why Audit Documentation required?
Audit documentation serves a number of purposes, including the following
1) Evidence of the auditor’s basis for a conclusion about the achievement of the overall objectives of the auditor
2) Evidence that the audit was planned and performed in accordance with SAs
3) Assisting the engagement team to plan and perform the audit.
4) Assisting members of the engagement team responsible for supervision to direct and supervise the audit work, and to discharge their review responsibilities in accordance with SA 220.
5) Enabling the engagement team to be accountable for its work.
6) Retaining a record of matters of continuing significance to future audits.
7) Enabling the conduct of quality control reviews and inspections in accordance with SQC
8) Enabling the conduct of external inspections in accordance with applicable legal, regulatory or other requirements.
Form, Content and Extent of Audit Documentation
The auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand:
1) The nature, timing, and extent of the audit procedures performed to comply with the SAs and applicable legal and regulatory requirements;
2) The results of the audit procedures performed, and the audit evidence obtained; and
3) Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions.
The form, content and extent of audit documentation depend on factors such as:
1) The size and complexity of the entity.
2) The nature of the audit procedures to be performed.
3) The identified risks of material misstatement.
4) The significance of the audit evidence obtained.
5) The nature and extent of exceptions identified.
6) The need to document a conclusion or the basis for a conclusion not readily determinable from the documentation of the work performed or audit evidence obtained.
7) The audit methodology and tools used.
Note:-
1) Audit documentation may be recorded on paper or on electronic or other media
2) The auditor shall prepare audit documentation on a timely basis (Better during the audit only)
Specific documentation as per SA-230
1) documenting the nature, timing and extent of audit procedures performed, the auditor shall record:
a) The identifying characteristics of the specific items or matters tested;
b) Who performed the audit work and the date such work was completed; and
c) Who reviewed the audit work performed and the date and extent of such review.
2) The auditor shall document discussions of significant matters with management, those charged with governance, and others, including the nature of the significant matters discussed and when and with whom the discussions took place.
3) If the auditor identified information that is inconsistent with the auditor’s final conclusion regarding a significant matter, the auditor shall document how the auditor addressed the inconsistency.
Matters Arising after the Date of the Auditor’s Report
If, in exceptional circumstances, the auditor performs new or additional audit procedures or draws new conclusions after the date of the auditor’s report, the auditor shall document:
1) The circumstances encountered;
2) The new or additional audit procedures performed, audit evidence obtained, and conclusions reached, and their effect on the auditor’s report; and
3) When and by whom the resulting changes to audit documentation were made and reviewed.
Assembly of the Final Audit File
1) The auditor shall assemble the audit documentation in an audit file and complete the administrative process of assembling the final audit file on a timely basis after the date of the auditor’s report (With in 60 days from date of Audit report).
2) After the assembly of the final audit file has been completed, the auditor shall not delete or discard audit documentation of any nature before the end of its retention period (7 years from date of audit report as per SQC-1).
3) In circumstances other than those envisaged in above where the auditor finds it necessary to modify existing audit documentation or add new audit documentation after the assembly of the final audit file has been completed, the auditor shall, regardless of the nature of the modifications or additions, document:
a) The specific reasons for making them; and
b) When and by whom they were made and reviewed.