Audit Documentation Flashcards
What is audit documentation?
Record of audit procedures performed (also called working papers)
What are the auditors objective for documentation?
1) Sufficient appropriate record for conclusions
2) Provide evidence that the audit was planned and performed that conformed with GAAS
Who owns the documentation?
belongs to the auditor
What is the composition in the audit documentation?
Matter of judgement (varies with circumstances, the quality of records, and effectiveness of I/C, and experience of staff)
What is the general requirements for audit documentation?
An experienced auditor should be able to obtain a clear understanding of the audit base off the working papers and be able to find the conclusions reached.
Should document important agreements or obtain abstracts of those agreements
Should document specific items tested
Any significant audit findings and issues and actions that have been taken (significant matters related to accounting principles, including the application or consistency)
Document any difficulties
Indications of possible material misstatements or significant risk
Finds that could result in modification of the audit report
Proposed audit adjustments (whether or not recorded by management)
Should identify the preparer and review of the specific documentation
Document any departures from mandatory requirement
Document report release date?
What is the report release date? Is it required for audit documentation?
Report release date: The date the auditor GRANTS the entity permission to use the auditor report.
What are the differences between AICPA and PCAOB for audit documentation?
AICPA: Require auditors to complete final audit documentation within 60 days of the report release date (documentation complete date)
PCAOB: Require complete audit documentation within 45 days of the report release date.
- Cannot delete documentation after that date
- Can add documentation if property documented (this will raise some eyebrows)
How long should the documents be retained?
AICPA: 5 years after the report release date
PCAOB: 7 years after the report release date
What is the permanent file? What are examples?
Matters concerning ongoing audit significant and may include:
- Client Industry
- Brief history of client
- Description of of the client’s facilities
- Legal documents
- Long-term contracts
- Articles of incorporation
- bylaws
- Debt agreements
- Leases
- Labor contracts
- Ratio analysis of the clients operations
What is in the Current Year’s Audit Files? What are examples?
Current year files include the auditors documentation of important administrative matters
- Audit plan
- Memoranda (planning activities, consideration of fraud, assessment of internal controls)
- Abstracts- Relevant client documents including BOD minutes, meeting with those in charge of governance)
- Letters (confirmations, attorney letters, management representation letters, engagement letter)
What the bulk file?
where documentation that is too voluminous can be stored
What is the correspondence file?
Where letters and e-mail letters to and from clients are organized so that the audit team can conveniently review communications related to each client organization.
What is the report file?
Where prior year’s audit report and management letters are organized (by client) so that the audit team can conveniently review formal reports previously issued for each client
