ICAI Notes: Audit Documentation | Auditing and Ethics for CA Intermediate PDF Download

 Page 1


a
    
 
CHAPTER 
6 
 
LEARNING OUTCOMES 
 
AUDIT 
DOCUMENTATION 
 
 
 
After studying this chapter, you would be able to understand- 
? Audit Documentation.  
? Nature and purpose of audit documentation.  
? Form, content and extent of audit documentation. 
? Audit documentation summary. 
? Audit file. 
? Assembly of the final audit file. 
? Ownership of audit documentation. 
? Practicality of above concepts by studying through examples 
and case studies. 
  
© The Institute of Chartered Accountants of India
Page 2


a
    
 
CHAPTER 
6 
 
LEARNING OUTCOMES 
 
AUDIT 
DOCUMENTATION 
 
 
 
After studying this chapter, you would be able to understand- 
? Audit Documentation.  
? Nature and purpose of audit documentation.  
? Form, content and extent of audit documentation. 
? Audit documentation summary. 
? Audit file. 
? Assembly of the final audit file. 
? Ownership of audit documentation. 
? Practicality of above concepts by studying through examples 
and case studies. 
  
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
OBJECTIVE
A sufficient and appropriate record 
of the basis for the auditor’s report
Evidence that the audit was planned 
and performed in accordance with 
SAs and applicable legal and 
regulatory requirements
Property of the 
Auditor 
Audit Documentation 
Audit File 
Completion 
Memorandum 
Audit Evidence 
Sufficient 
Appropriate 
CHAPTER OVERVIEW W
© The Institute of Chartered Accountants of India
Page 3


a
    
 
CHAPTER 
6 
 
LEARNING OUTCOMES 
 
AUDIT 
DOCUMENTATION 
 
 
 
After studying this chapter, you would be able to understand- 
? Audit Documentation.  
? Nature and purpose of audit documentation.  
? Form, content and extent of audit documentation. 
? Audit documentation summary. 
? Audit file. 
? Assembly of the final audit file. 
? Ownership of audit documentation. 
? Practicality of above concepts by studying through examples 
and case studies. 
  
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
OBJECTIVE
A sufficient and appropriate record 
of the basis for the auditor’s report
Evidence that the audit was planned 
and performed in accordance with 
SAs and applicable legal and 
regulatory requirements
Property of the 
Auditor 
Audit Documentation 
Audit File 
Completion 
Memorandum 
Audit Evidence 
Sufficient 
Appropriate 
CHAPTER OVERVIEW W
© The Institute of Chartered Accountants of India
 
 
AUDIT DOCUMENTATION 
a
 
6.3 
Sameer received a news alert on his mobile pointing to unconfirmed media reports of 
providing a Digi locker type facility to auditors for keeping audit documentation in 
times to come. He immediately grasped the idea as Aadhar card, senior secondary 
school mark sheet and driving license were being stored by him in such an electronic 
locker. “Such a facility, if it happened to materialize in future in whatever form, would 
provide many benefits which come with such an electronic storage”, he pondered. 
Audit evidence which an auditor obtains by performing various audit procedures along 
with details of those procedures have to be put into writing. Further, inferences drawn 
upon by the auditor from evidence obtained and conclusions reached are also 
documented. Sameer was spontaneously nodding that auditing was, indeed, a logical 
process. 
Without proper documentation, an audit has no legs to stand upon. It is audit 
documentation which serves as a record of audit work performed. He was also mulling 
over that, in fact, audit documentation throws up a sort of protective shield around 
auditors. If an auditor plans and performs his work professionally, his working papers 
will come to his rescue, in case such a situation arises. Conclusions reached by him can 
be traced to his working papers. 
“Oh! That is importance of documentation”, he exclaimed. Now, he understood why 
Shekhar’s seniors used to prompt him to make correspondence with company’s 
officers on mail. Because, it is the documentation that makes the difference. They were 
right because consequences of not making proper documentation were known to 
them and poor guys like us were still on learning curve. 
 1. AUDIT DOCUMENTATION 
SA 230 on “Audit Documentation”, deals with the auditor’s responsibility to prepare 
audit documentation for an audit of financial statements. It is to be adapted as 
necessary in the circumstances when applied to audits of other historical financial 
information. The specific documentation requirements of other SAs do not limit the 
application of this SA. Laws or regulations may establish additional documentation 
requirements.  
 
© The Institute of Chartered Accountants of India
Page 4


a
    
 
CHAPTER 
6 
 
LEARNING OUTCOMES 
 
AUDIT 
DOCUMENTATION 
 
 
 
After studying this chapter, you would be able to understand- 
? Audit Documentation.  
? Nature and purpose of audit documentation.  
? Form, content and extent of audit documentation. 
? Audit documentation summary. 
? Audit file. 
? Assembly of the final audit file. 
? Ownership of audit documentation. 
? Practicality of above concepts by studying through examples 
and case studies. 
  
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
OBJECTIVE
A sufficient and appropriate record 
of the basis for the auditor’s report
Evidence that the audit was planned 
and performed in accordance with 
SAs and applicable legal and 
regulatory requirements
Property of the 
Auditor 
Audit Documentation 
Audit File 
Completion 
Memorandum 
Audit Evidence 
Sufficient 
Appropriate 
CHAPTER OVERVIEW W
© The Institute of Chartered Accountants of India
 
 
AUDIT DOCUMENTATION 
a
 
6.3 
Sameer received a news alert on his mobile pointing to unconfirmed media reports of 
providing a Digi locker type facility to auditors for keeping audit documentation in 
times to come. He immediately grasped the idea as Aadhar card, senior secondary 
school mark sheet and driving license were being stored by him in such an electronic 
locker. “Such a facility, if it happened to materialize in future in whatever form, would 
provide many benefits which come with such an electronic storage”, he pondered. 
Audit evidence which an auditor obtains by performing various audit procedures along 
with details of those procedures have to be put into writing. Further, inferences drawn 
upon by the auditor from evidence obtained and conclusions reached are also 
documented. Sameer was spontaneously nodding that auditing was, indeed, a logical 
process. 
Without proper documentation, an audit has no legs to stand upon. It is audit 
documentation which serves as a record of audit work performed. He was also mulling 
over that, in fact, audit documentation throws up a sort of protective shield around 
auditors. If an auditor plans and performs his work professionally, his working papers 
will come to his rescue, in case such a situation arises. Conclusions reached by him can 
be traced to his working papers. 
“Oh! That is importance of documentation”, he exclaimed. Now, he understood why 
Shekhar’s seniors used to prompt him to make correspondence with company’s 
officers on mail. Because, it is the documentation that makes the difference. They were 
right because consequences of not making proper documentation were known to 
them and poor guys like us were still on learning curve. 
 1. AUDIT DOCUMENTATION 
SA 230 on “Audit Documentation”, deals with the auditor’s responsibility to prepare 
audit documentation for an audit of financial statements. It is to be adapted as 
necessary in the circumstances when applied to audits of other historical financial 
information. The specific documentation requirements of other SAs do not limit the 
application of this SA. Laws or regulations may establish additional documentation 
requirements.  
 
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.4 
1.1 Definition of Audit Documentation: 
Audit Documentation refers to the record of audit procedures performed, relevant 
audit evidence obtained, and conclusions the auditor reached. (terms such as 
“working papers” or “work papers” are also sometimes used.)   
 
1.2 Objective of the Auditor: 
The objective of the auditor is to prepare documentation that provides:  
(a)  A sufficient and appropriate record of the basis for the auditor’s report; and  
(b)  Evidence that the audit was planned and performed in accordance with SAs 
and applicable legal and regulatory requirements. 
 
1.3 Nature of Audit Documentation 
Audit documentation provides: 
(a) evidence of the auditor’s basis for a conclusion about the achievement of the 
overall objectives of the auditor; and 
• To prepare documentation that
provides:
a) A sufficient and appropriate
record of the basis for the
auditor’s report; and
b) Evidence that the audit was
planned and performed in
accordance with SAs.
Objective of 
the Auditor
© The Institute of Chartered Accountants of India
Page 5


a
    
 
CHAPTER 
6 
 
LEARNING OUTCOMES 
 
AUDIT 
DOCUMENTATION 
 
 
 
After studying this chapter, you would be able to understand- 
? Audit Documentation.  
? Nature and purpose of audit documentation.  
? Form, content and extent of audit documentation. 
? Audit documentation summary. 
? Audit file. 
? Assembly of the final audit file. 
? Ownership of audit documentation. 
? Practicality of above concepts by studying through examples 
and case studies. 
  
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
OBJECTIVE
A sufficient and appropriate record 
of the basis for the auditor’s report
Evidence that the audit was planned 
and performed in accordance with 
SAs and applicable legal and 
regulatory requirements
Property of the 
Auditor 
Audit Documentation 
Audit File 
Completion 
Memorandum 
Audit Evidence 
Sufficient 
Appropriate 
CHAPTER OVERVIEW W
© The Institute of Chartered Accountants of India
 
 
AUDIT DOCUMENTATION 
a
 
6.3 
Sameer received a news alert on his mobile pointing to unconfirmed media reports of 
providing a Digi locker type facility to auditors for keeping audit documentation in 
times to come. He immediately grasped the idea as Aadhar card, senior secondary 
school mark sheet and driving license were being stored by him in such an electronic 
locker. “Such a facility, if it happened to materialize in future in whatever form, would 
provide many benefits which come with such an electronic storage”, he pondered. 
Audit evidence which an auditor obtains by performing various audit procedures along 
with details of those procedures have to be put into writing. Further, inferences drawn 
upon by the auditor from evidence obtained and conclusions reached are also 
documented. Sameer was spontaneously nodding that auditing was, indeed, a logical 
process. 
Without proper documentation, an audit has no legs to stand upon. It is audit 
documentation which serves as a record of audit work performed. He was also mulling 
over that, in fact, audit documentation throws up a sort of protective shield around 
auditors. If an auditor plans and performs his work professionally, his working papers 
will come to his rescue, in case such a situation arises. Conclusions reached by him can 
be traced to his working papers. 
“Oh! That is importance of documentation”, he exclaimed. Now, he understood why 
Shekhar’s seniors used to prompt him to make correspondence with company’s 
officers on mail. Because, it is the documentation that makes the difference. They were 
right because consequences of not making proper documentation were known to 
them and poor guys like us were still on learning curve. 
 1. AUDIT DOCUMENTATION 
SA 230 on “Audit Documentation”, deals with the auditor’s responsibility to prepare 
audit documentation for an audit of financial statements. It is to be adapted as 
necessary in the circumstances when applied to audits of other historical financial 
information. The specific documentation requirements of other SAs do not limit the 
application of this SA. Laws or regulations may establish additional documentation 
requirements.  
 
© The Institute of Chartered Accountants of India
a
 
 
 
AUDITING AND ETHICS  
 
6.4 
1.1 Definition of Audit Documentation: 
Audit Documentation refers to the record of audit procedures performed, relevant 
audit evidence obtained, and conclusions the auditor reached. (terms such as 
“working papers” or “work papers” are also sometimes used.)   
 
1.2 Objective of the Auditor: 
The objective of the auditor is to prepare documentation that provides:  
(a)  A sufficient and appropriate record of the basis for the auditor’s report; and  
(b)  Evidence that the audit was planned and performed in accordance with SAs 
and applicable legal and regulatory requirements. 
 
1.3 Nature of Audit Documentation 
Audit documentation provides: 
(a) evidence of the auditor’s basis for a conclusion about the achievement of the 
overall objectives of the auditor; and 
• To prepare documentation that
provides:
a) A sufficient and appropriate
record of the basis for the
auditor’s report; and
b) Evidence that the audit was
planned and performed in
accordance with SAs.
Objective of 
the Auditor
© The Institute of Chartered Accountants of India
 
 
AUDIT DOCUMENTATION 
a
 
6.5 
(b) evidence that the audit was planned and performed in accordance with SAs 
and applicable legal and regulatory requirements. 
1.4 Purpose of Audit Documentation 
The following are the purpose of Audit documentation: 
1. Assisting the engagement team to plan and perform the audit. 
2. Assisting members of the engagement team 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 signi?cance 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. 
ILLUSTRATION 1 
A new team member of the auditors of Extremely Vibrant Limited was of the view 
that Audit Documentation does not help in planning the audit of any company. 
Explain whether Audit Documentation has any relation with regard to planning the 
audit of a company. 
SOLUTION 
Audit Documentation helps in planning the audit of a company in a proper manner 
and also helps in conducting the audit of that company in a more effective way. 
1.5 Form, Content and Extent of Audit Documentation 
? The auditor shall prepare audit documentation that is sufficient to enable an 
experienced auditor, having no previous connection with the audit, to 
understand: 
(a) The nature, timing and extent of the audit procedures performed. 
(b) The results of the audit procedures performed and the audit evidence 
obtained and  
© The Institute of Chartered Accountants of India