AUDIT
DOCUMENTATION
CHAPTER 18
AUDIT
DOCUMENTATION
PSA 230, Audit Documentation
Establishes standards and provides
guidance on audit documentation.
Requires timely basis preparation of audit
documentation that provides:
(a) A record of the basis for the auditor’s
. report
(b) Accordance with PSAs and regulations
Audit Documentation:
Record of audit procedures, evidence, and
conclusions.
Audit File:
01
Audit
Documentation
Physical or electronic storage containing audit
documentation.
02 Audit File
Experienced Auditor:
Individual with knowledge of:
a. Audit processes,
03 Experienced
Auditor b. PSAs and applicable legal and regulatory
requirements,
c. The business environment in which the entity
operates, and
d. Auditing and financial reporting issues relevant
to the entity's industry.
OBJECTIVES OF AUDIT
DOCUMENTATION
Ensure audit quality and timely review before
final report.
Other objectives:
Assist in planning and performing the
audit
Facilitate supervision and review
Promote accountability
Retain records for future audits
Enable quality control reviews
Allow external inspections
FORM, CONTENT AND
EXTENT OF THE AUDIT
DOCUMENTATION:
(a) The nature, timing, and extent of the audit
procedures performed to comply with the PSAs and
applicable legal and regulatory requirements
(b) The results of the audit procedures performed, and
the audit evidence. obtained; and
(c) Significant matters arising during the audit, the
conclusions reached thereon, and significant
professional judgments made in reaching those
conclusions.
Factors affecting
The nature and extent of
documentation: exceptions identified.
The need to document a
The size and complexity of the conclusion or the basis for a
entity. conclusion not readily
The nature of the audit determinable from the
procedures to be performed. documentation of the
The identified risks work performed of audit
of material misstatement. evidence obtained.
The The audit methodology and
significance of the tools used.
audit evidence obtained.
DOCUMENTING THE NATURE, THE AUDITOR SHALL,
TIMING AND EXTENT OF AUDIT REGARDLESS OF THE NATURE
PROCEDURES PERFORMED, THE OF THE MODIFICATIONS OR
AUDITOR SHALL RECORD: ADDITIONS, DOCUMENT:
(a) The identifying characteristics of
(a) The specific reasons for making
the specific items or matters tested;
them; and
(b) Who performed the audit work
and the date such work was
completed.
(b) When and by whom they were
(c) Who reviewed the audit work
made and reviewed.
performed and the date and extent
of such review.
CHARACTERISTICS OF QUALITY AUDIT
DOCUMENTATION
Forms the basis for auditor’s representations and
conclusions.
01
Documenting
Planning & Risk 1. Documenting Planning & Risk Assessment
Assessment
Must include:
02 Documenting
Audit Work
Overall audit strategy and plan
Performed Responses to risks of material misstatement
2. Documenting Audit Work Performed
03 Documenting
Significant
Issues Types of documentation:
Client’s trial balance and proposed adjustments
Copies of key documents
Auditor analyses
CHARACTERISTICS OF QUALITY AUDIT
DOCUMENTATION
Forms the basis for auditor’s
01
Documenting
Planning & Risk representations and conclusions.
Assessment
3. Documenting Significant Issues
02 Documenting
Audit Work
Performed Significant findings include:
Complex or unusual accounting matters
03 Documenting
Significant
Results requiring audit procedure
Issues changes
Audit adjustments
Difficulties during audit
Issues affecting the auditor’s report
TYPES OF
WORKING
PAPERS
01
Aid auditors in planning and
AUDIT administration
engagements.
of
ADMINISTRATIVE It include audit plans and
WORKING PAPERS programs, internal control
questionnaires and flowcharts,
engagement letters, and time
budgets.
Audit Program
a list of audit procedures to be
performed in an audit engagement
Types of Audit Program
Purpose of Audit Program Standard all-purpose audit program
Tailor-made audit program
It serves as a procedural guide during Modified standard form audit
the course of the audit. program
It serves as a basis in dividing the
audit work among staff members.
It serves as a basis of reviewing
progress of audit work.
It enables the auditor to ensure that
the program designed to substantiate
amounts appearing in the accounts
and related notes have covered all
material aspects thereof.
Working Trial Balance
02 accounts in the client’s general ledger
with columns that include unadjusted
amounts, proposed adjusting entries, and
WORKING TRIAL adjusted (audited) amounts.
the backbone of the working papers
BALANCE AND Lead Schedule
LEAD SCHEDULE Shows the grouping of related account
balances.
Each line item on the trial balance is
supported by a lead schedule.
Each detailed account on the lead
schedule is supported by appropriate
supporting schedules which provide
evidence of audit work performed and
the conclusions reached.
Supporting Schedules
03 detailed schedules prepared by auditors
in support of specific amounts on the
financial statements.
SUPPORTING Example: cash count sheet
SCHEDULES AND Account Analysis
shows the activity during the period in a
ANALYSES particular statement of financial position
account
starts with the beginning balance, shows
the transactions (additions and
reductions), and concludes with the
ending balance
often used for notes receivable,
marketable securities, property, plant and
equipment, long-term debt and for all
equity accounts
04 Adjusting Entries
Corrections of material errors in the
SUMMARY OF accounting records discovered by the
auditor.
ADJUSTING AND Entries must be approved by the client
because management has primary
RECLASSIFYING responsibility for the fair presentation of
the statement.
ENTRIES Reclassifying Entries
These are made in the statements to
present accounting information properly,
even when the general ledger balances
are correct.
Audit Notes
05 This is the working paper used to note
items of work to be done that cannot be
AUDIT NOTE OR completed by following the usual
sequence of audit procedures.
MEMORANDA AND Also used to record questions concerning
DOCUMENTATION OF the audit investigation.
CORROBORATING Outside Documentation
INFORMATION Much of the content of the working paper
consist of the outside documentation
gathered by auditors, such as
confirmation replies, and copies of client
agreements. They are indexed and
interfiled and procedures are indicated
on them in the same manner as on the
other schedule.
TWO MAIN DIVISIONS OF
AUDIT WORKING PAPERS
WORKING 1. Current Audit File
This file contains all papers accumulated
PAPER FILES during the current year’s examination. The
It is a set of documents working papers normally included in the
prepared by auditors that current file are:
contains the evidence, analyses, Draft reports and financial statements
and conclusions supporting the Audit plans and programs
audit opinion.
Working trial balance
Serves as the record of the
auditor’s work performed and Adjusting and reclassifying journal
the basis for the audit report. entries
Lead and supporting schedules
Management representation letters and
general notes
Main Divisions of Audit Other files may also be
Working Papers maintained such as:
Permanent File Tax Files
Contains historical or continuing Contain current and past
information tax info
Useful for future audits
Includes: charter, contracts, org
chart, accounting procedures
Correspondence Files
Contain communications
with client
Index Year-end Audit File
Contains audit reports and checklists
Journal entries and working trial balance
Notes, letters, and client information
Overall Audit Strategy
Establish audit plan and objectives
Determine materiality and identify risks
Set audit budget and team meeting
Assessing Risk of Material Misstatement
Evaluate control environment and
internal controls
Review management estimates
Identify high-risk areas (sales, payroll,
inventory)
Financial Statement Checklists & Tests
Covers balance sheet and income
statement items
Includes substantive tests for accuracy
Ensures all accounts are properly
verified
MECHANICS OF WORKING
PAPER PREPARATION Liquid Asset
Must be complete, clear, and factual
Show audit work and conclusions
Well-organized and concise
COMPUTER-GENERATED
WORKING PAPERS
Faster and more accurate
Automates calculations and cross-
references
Easy to update and store
OWNERSHIP
AND CUSTODY
OF WORKING Working papers belong to the auditor
PAPER Must be kept safe and confidential
Shared only when required by law
CONFIDENTIALITY
OF WORKING
PAPERS Keep all client information private
No disclosure or personal use
Allowed only if required by law or
professional duty
THANK
YOU!
CALDERON, JANELLI
CRUZ, PAULEENE
JULIAN, NICOLE