Ch-6 Audit Documentation

Question 1

Definition of Audit Documentation

Answer 1

Audit Documentation refers to the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached.

Question 2

Purpose of Audit Documentation

Answer 2

The following are the purpose of Audit documentation:
1. Assisting the engagement team to plan and perform the audit.
2. Assisting members of to direct and supervise the audit work, and to discharge their review responsibilities.
3. Enabling the engagement team to be accountable for its work.
4. Retaining a record of matters of continuing significance to future audits.
5. Enabling the conduct of quality control reviews and inspections in accordance with SQC 1.
6. Enabling the conduct of external inspections in accordance with applicable legal, regulatory or other requirements.

Question 3

The form, content and extent of audit documentation depend on factors such as:

Answer 3

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.

Question 4

Examples of Audit Documentation

Answer 4

Audit programmes.
Analyses.
Issues memoranda.
Summaries of significant matters.
Letters of confirmation and representation.
Checklists.
Correspondence (including e-mail) concerning significant matters.

Question 5

What is Audit File

Answer 5

Audit file may be defined as 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.

Question 6

Changes may, however, be made to the audit documentation during the final
assembly process, if they are administrative in nature.
Give example.

Answer 6

Examples of such changes include:
* Deleting or discarding superseded documentation.
* Sorting, collating and cross-referencing working papers.
* Signing off on completion checklists relating to the file assembly
process.
* Documenting audit evidence that the auditor has obtained, discussed and agreed with the relevant members of the engagement team before the date of the auditor’s report.

Question 7

What is Completion Memorandum and why are they made?

Answer 7

The auditor may consider it helpful to prepare and retain as part of the audit documentation a summary (sometimes known as a completion memorandum) that describes-
* the significant matters identified during the audit and
* how they were addressed.

Such a summary may facilitate effective and efficient review and inspection of the audit documentation, particularly for large and complex audits. Further, the preparation of such a summary may assist auditor’s consideration of the significant matters. It may also help the auditor to consider whether there is any individual relevant SA objective that the auditor cannot achieve that would prevent the auditor from achieving the overall objectives of the auditor.

Question 8

Ownership of Audit Documentation

Answer 8

• Standard on Quality Control (SQC) 1 provides that, unless otherwise specified
  by law or regulation, audit documentation is the property of the auditor.
• He may at his discretion, make portions of, or extracts from, audit documentation available to clients, provided such disclosure does not undermine the validity of the work performed, or, in the case of assurance engagements, the independence of the auditor or of his personnel.