audit documentation

CA Venkatesan Murali

• Robert Hiester Montgomery, Considered father of Auditing.

• Also co-founder of Pwc

• His book “Auditing theory and Practice” is still considered as benchmark book for Audit industry

• Asserted on Documentation for proper audit trail

Little History!!



What is Documentation?

• Audit documentation (SA 230)

The record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached (terms such as “working papers” or “workpapers” are also sometimes used)

What is Documentation?



Need for Documentation?

• 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

Nature , extent timing of the audit procedures to comply with SA’s and Legal requirements

the results of the audit procedures & audit evidence

Significant matters arising during the audit, the conclusions reached and professional judgement involved.

How Much ?


Document Sufficient detail

• Month reviewed, record referred, dates, asset, PO, invoices, etc

• Work done;

• Evidences seen;

• Findings;

• Conclusion.

• Your End Product will be the Work paper file

How Much ?



Audit Work Paper? Risk Judgement Need of Analysis Conclusion less

apparent Significance of

Evidence

More Documentation


Audit Work Paper?


Work Paper Hierarchy ? • Lead schedule

• Sub schedule

• Variance and analytics with reasoning

• Controls (System understanding, identify control and link to audit/FS objective of Accuracy, completeness, cut off…and also operational control)

• Test of details - Audit program to be linked to Audit assertion, sample tested

• Basis of Sample, transaction volume, no. of samples

• Every work paper should be in PSENT form

Referencing is the means by which the trial balance and the financial statements can be linked back to the audit work papers.


Referencing ?

Referencing ?

• Timely removal- not only permitted but encouraged during the audit and during the “file assembly” period, but not after a subpoena (or notice of regulatory investigation) arrives

• Client correspondence that is not related to the audit may be retained in separate correspondence or desk files, but not in audit workpapers

Superseded, redundant, and other

unnecessary material ?

Audit notebook is a diary on which auditor scribble down

all important inquiries to avoid the possibility of

unquestioned material facts Audit Documentation are all

documents which are acquired in the process of audit

Audit Note book v/s Audit

Documentation

• Filing/keeping of working papers

• Checklist of documents to be obtained and maintained

• Indexing of documents/ working papers

• Proper numbering/ sequencing of working papers

• Summarizing of overall findings

• Writing of queries

Our Duty !!!

• Discussing with seniors on matters of importance

• Disposing of Query -at staff level/ senior level/ partner level

• Importance of the working papers to be signed, dated and approved by relevant level of audit staff with sufficient cross reference

• Importance of depicting the client’s name, file number, accounting period, subject of working paper and reference of working paper with current or permanent file

Our Duty !!!


Working Paper Models


A model Documentation on Effective

Tax Rate

Thank You


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audit documentation

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