10: Documentation

Question 1

What is audit documentation?

Answer 1

the record of procedures performed, relevant evidence obtained and conclusions the auditor reached.

Question 2

Why does audit work need to be documented?

Answer 2

the working papers are tangible evidence of the work done in support of the conclusion.

• Evidence that audit was planned and performed in accordance with ISAs and legal/reg requirements.

Question 3

What are other (non-essential) reasons for auditors recording their work?

Answer 3

• Assist the team to plan and perform audit, assist team to direct and supervise work.
• Enable audit team to be accountable for its work
• Retain a record of matters for future audits
• Enable an experienced auditor to carry out quality control reviews and conduct external inspections

Question 4

What should working papers show?

Answer 4

• The name of the client/reviewer
• Date of report/review
• Subject, Objective, source of info
• Sample info
• Work done
• Results, errors, key points
• Conclusions

Question 5

What should documentation be

Answer 5

Sufficient for an auditor to understand nature, timing and extent of audit procedures to comply with ISAs, results and evidence obtained, conclusions reached, judgement made.

Question 6

What are the advantages of automated working papers?

Answer 6

Make documenting of audit much easier:

• Risk of error reduced, less human intervention/error
• Working papers neater and easier to review
• Time saved will be substantial as adjustments can be easily made to all working papers
• Online so don’t have to be carried to locations, ^ Security also can be emailed or faxed for review

Question 7

What is the difference between permanenet audit files and current audit files?

Answer 7

Perm: Contain info of continuing importance to the audit

Current: contain any info of relevance to the current year’s audit

Question 8

What is included in permanent audit files

Answer 8

• Engagement letters
• New client questionnaire
• The memorandum and articles of association
• Client history, PY accounts, AP’s, system notes and control questionnaires.

Question 9

What is included in current audit files?

Answer 9

• Financial statements, accounts checklist
• Summary of unadjusted errors, report to partner of significant events/errors
• Audit planning memorandum, time budgets, summaries and risk assessments.
• A lead schedule incl details of figures to be included in accounts
• Tests of detail and TOC conclusions drawn

Question 10

How should firms keep working papers secure?

Answer 10

Physical: Kept securely in locked premises

Electronic: protected with electronic controls e.g. password

Question 11

Who owns the following:
Working papers
Audit report

Answer 11

wp: Assurance provider - must be confidential, also only have to show firm at auditors discretion
AR: Clients property once issued

Question 12

What is the document retention policy

Answer 12

ICAEW requires firms to keep all audit WP for at least 6 years from end of audit period to which they relate.