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9/17/2017
1
Audit Documentation 101:How to Fly
through Review
Sandy S. Jansen Office of Audit and ComplianceExecutive Director The University of Tennessee System
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Objectives
A. Audit EvidenceB. ProceduresC. DocumentationD. Audit Issues/Observations/FindingsE. Self-Review
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Audit EvidencePrepare for takeoff!
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Strength of Evidence
• Physical• Documentary• Testimonial IIA Standard 2310
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Strength of Evidence
• Relevant• Reliable• Sufficient• Useful
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IIA Standard 2310
Efficiency of Evidence
• Time to test• Knowledge of subject• Complexity• Access
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Audit ProceduresSoar to new heights!
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Audit Testing
Inquiry ObservationInspection VouchingTracing ReperformanceAnalytical Procedures
Confirmation
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Audit Sampling
Sampling Considerations• Control/Compliance Testing. Testing to determine whether activities are conducted according to policies, procedures, or desired practices and whether controls are in place.
• Substantive Testing. Testing to estimate the total population (e.g., total value of an account balance). Statistical sampling must be used to extrapolate to the entire population.
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Sampling Methods
Method Project to population?
Testing all items?
Sampling Random, Systematic
Yes, if statistical No
Haphazard, Judgmental
No No
Selection Judgmental No Yes
Sample Size for Small Populations(expect zero exceptions)
Frequency & Population Size Sample Size
Quarterly (4) 2
Monthly (12) 2-4
Semi-monthly (24) 3-8
Weekly (52) 5-9
Population of 52-250 10% of population
Nonstatistical Sample Size Example
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Audit DocumentationTake flight!
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Documentation Standards
IIA Standard 2330 requires internal auditors to document relevant information to support the conclusions and engagement results.
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Got Workpapers?
Types of Documentation
• Narratives• Spreadsheet• Flow Charts
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CommonWorkpaperRequirements
Common Workpaper RequirementsThe working paper is titled, signed, and dated
• The name of project• The unique title of the working paper• The auditor’s initials• The date completed• A page number and reference
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Common Workpaper Requirements
• Purpose• Source• Procedure/Approach• Results• Conclusion
Common Workpaper Requirements
• Every tickmark is explained• All cross references are two-way• Neat and legible• Referenced to program• Understandable • Source documents included, if necessary
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Summary Memo
Audit Objective
Audit Program
Summary Memo
Detailed Workpapers
Audit Issues/ObservationsFly with us!
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Elements of an Audit Issue
ConditionCriteriaConsequences (Effect & Significance)CauseCorrective Action(Recommendation)
Elements
Condition
What exists?
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Elements
Criteria
What should exist?
Elements
Consequences (Effect & Significance)
So what?
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Elements
Cause
Why did this occur?
Elements
Corrective Action(Recommendation)
What is needed?
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Root Cause Analysis
ConditionCriteriaConsequences (Effect & Significance)CauseCorrective Action(Recommendation)
Self-ReviewGet a bird’s eye view!
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Purpose of Review
1. To ensure the audit is properly planned2. To evaluate the adequacy of work performed3. To ensure all documentation of work performed is complete4. To ascertain whether audit objectives have been met5. To ensure conclusions are fully supported
Standards
What do the Standards require?
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Self-Review Hierarchy • Audit Objectives
• Audit Program Steps• Summary Memos or Audit Procedures
• Details or Support
audit objectives
program stepsdocumentation of
work donedetails or support
Fresh Set of Eyes
•Use self-review checklist• Consider hierarchy of review
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Before work is submitted for formal review, all auditors should conduct a self-review.
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Sandy S. Jansen, CIA, CCSA, CRMAExecutive Director
sjansen@tennessee.edu
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