Topic 6: Audit DocumentationChapter 7

AUD390 AUDITING DIA

TOPIC 1: AUDIT DOCUMENTATION

References: Chapter 7

AUD390 2011

AUD390 AUDITING DIA

AUDIT DOCUMENTATION

IMPORTANCE OF AUDIT WORKING

PAPERS

CONTROL & RIGHTTO THE AUDIT

WORKING PAPERS

INDEXING, AUDIT,CROSS-FOOTING

& EXTENSION

TYPES OF WORKING PAPERS

TYPES OFAUDIT FILES

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

Contents of Audit DocumentationsA record of the evidence accumulated It include the results of the testsData 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

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

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

Ownership of Audit Files – Property of the auditor

Confidentiality of Audit File –Refer MIA By-Laws (Code of Professional Conduct & Ethics)

AUD390 AUDITING DIA

Permanent FilesDef … 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

Information related to the understanding of internal control & assessment of control risk

The results of analytical procedures from previous years’ audits

AUD390 AUDITING DIA

Current FilesAll 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

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

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 courtUsed as part of MIA approved peer review

program with other CA firms

AUD390 AUDITING DIA

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