Topic 6 audit documentation

1. Topic 6: Audit Documentation
Chapter 7
AUD390 AUDITING DIA

2. TOPIC 1: AUDIT DOCUMENTATION
References: Chapter 7
AUD390 2011

3. AUD390 AUDITING DIA
AUDIT
DOCUMENTATION
IMPORTANCE OF
AUDIT WORKING
PAPERS
CONTROL & RIGHT
TO THE AUDIT
WORKING PAPERS
INDEXING, AUDIT,
CROSS-FOOTING
& EXTENSION
TYPES OF
WORKING PAPERS
TYPES OF
AUDIT FILES

4.  Def… the principal record of auditing
procedures applied, evidence obtained, &
conclusions reached by the auditor in the
engagement
 Also known as working papers
 It should include:
› The information the auditor consider
necessary to conduct the audit
› The information needed to prepare an audit
report
 Objective:
› The aid to auditor in providing reasonable
assurance that an adequate audit was
conducted in accordance with auditing
standards
AUD390 AUDITING DIA

5.  Contents of Audit Documentations
A record of the evidence accumulated
It include the results of the tests
Data for determining the proper type of audit
report
It include documentation about significant
audit findings or issues, actions taken to
address them, and the basis for the conclusions
reached
AUD390 AUDITING DIA

6.  It provides a basis for planning the audit
 Basis for review by supervisor and partners
 Provides an important sources of information to
assist the auditor in deciding the appropriate
audit report to issue
 Data in the files are useful for evaluating the
adequacy of audit scope & the fairness of the fin
stats
 It contains information needed to assist the
client in the preparation of fin stats
AUD390 AUDITING DIA

7.  Use as a reference by supervisory personnel to
evaluate whether sufficient appropriate
evidence was accumulated to justify the audit
report
 Serve as the basis for preparing tax returns
 Source of information for issuing communication
to AC and management concerning various
matters such as internal control weaknesses or
operational recommendations
 A useful frame of reference for training
personnel and as an aid in planning &
coordinating subsequent audits
AUD390 AUDITING DIA

8.  Ownership of Audit Files – Property of the
auditor
 Confidentiality of Audit File –Refer MIA By-Laws
(Code of Professional Conduct & Ethics)
AUD390 AUDITING DIA

9.  Permanent Files
Def … Data of a historical or continuing nature
pertinent to the current audit
It include:
 Extract or copies of such company documents
of continuing importance as the articles of
incorporation, bylaws, bond indentures &
contracts
 Analysis from previous years of accounts that
have continuing importance to the auditor
AUD390 AUDITING DIA

10.  Information related to the understanding of
internal control & assessment of control risk
 The results of analytical procedures from
previous years’ audits
AUD390 AUDITING DIA

11.  Current Files
All audit documentation applicable to the year
under audit
It include:
 Audit Programs
 Auditing Standards require a written audit
program for every audit
 General Information
 Documents to support audit for current year
 E.g. audit planning memos, abstracts or
copies of minutes of the BOD meeting,
abstract or contracts or agreements not
include in the permanent file, etc.
AUD390 AUDITING DIA

12.  Working Trial Balance
 A listing of the general ledger accounts &
their year-end balances
 Supporting Schedules
 E.g. analysis, trial balance or list,
reconciliation of amounts, test of
reasonableness, summary of procedures,
examination of supporting documents,
informational & outside documentation
AUD390 AUDITING DIA

13.  The ownership: the property of the auditor
 Part A-5 of the MIA By-Laws (Code of Professional
Conduct & Ethics) highlighted that there is a
need to maintain a confidential relationship with
the client
 Exception:
Subpoenaed by a court
Used as part of MIA approved peer review
program with other CA firms
AUD390 AUDITING DIA

14. 1. Differentiate between ‘permanent audit file’
and ‘current audit file’ and give 1 example of
the document contained in the respective files.
2. Briefly describe 3 purposes of preparing audit
working papers.
AUD390 AUDITING DIA