6.

AUDIT
DOCUMENTATION
1. Explain the objective and benefits or purpose of audit documentation?

A. Objective of the auditor [MTP May-24-I]

Prepare documentation that provides:
Sufficient and appropriate record of the basis for the auditor’s report; and
Evidence that the audit was planned and performed in accordance with SAs and
ALARRQ.

B. Benefits or purpose of audit documentation: [MTP May-25-

I]
1. Assisting engagement team to plan and perform the audit.
2. Assisting engagement team members
to direct and supervise the audit work, and to discharge their review
responsibilities.
3. Enabling engagement team to be accountable for its work.
4. Retaining a record of matters of continuing significance to future audits.
5. Enabling the conduct of quality control reviews and inspections in accord. with
SQC 1.
6. Enabling the conduct of external inspections in accordance with ALARRQ.

2. What is the form, content and extent of audit documentation or [RTP May-
25]
How or in what manner the auditor shall prepare documentation?

1. Auditor shall prepare audit documentation that is sufficient to enable an experienced

auditor, having no previous connection with the audit, to understand:
a. NTE of the AP performed.
b. Results of the AP performed and the AE obtained.
c. Significant matters arising during the audit and conclusions reached thereon
and Significant professional judgements made in reaching those conclusions.

2. Further in documenting the NTE of audit procedures performed, the auditor shall
record:
a. Identifying characteristics of the specific items tested or matters tested.
b. Who performed the audit work and the date such work was completed.
c. Who reviewed the audit work performed and date and extent of such review.
[Sep-25]
3. Also, the auditor shall document significant matters discussed with MGT, TCWG,
including Nature of significant matters discussed and when and with whom the
discussions took place.
If auditor identified info. is inconsistent with the auditor’s final conclusion
regarding sig. matters. auditor shall document how the auditor addressed the
inconsistency.

3. Explain the factors that determine the form, content, and extent of audit
documentation?
[MTP May-24-I] [RTP Sep-25] [MTP Jan-26-I]
1. Nature, size and complexity of the entity
2. Nature of the audit procedures to be performed
3. Identified RMM
4. Significance of audit evidence obtained
5. Nature and extent of exceptions identified
6. Audit methodology and tools used
7. Need to document a conclusion or the basis for a conclusion
not readily determinable from the documentation of the work performed or AE
obtained.
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DOCUMENTATION
4. Write about examples of audit documentation include and exclude?

A. Examples of audit documentation include: [Sep-25]

1. Audit programmes
2. Analyses
3. Issues memoranda
4. Checklists
5. Letters of confirmation and representation
6. Summaries of significant matters
7. Correspondence on significant matters (including e-mail)
8. Significant and specific contracts and agreements

Auditor may include copies of entity’s records as part of audit documentation.

Audit documentation is not a substitute for the entity’s accounting records.

B. Auditor need not include in audit documentation of: [Sep-24]

1. Superseded drafts of working papers and financial statements,
2. Notes that reflect incomplete or preliminary thinking,
3. Previous copies of documents corrected for typographical or other errors, and
4. Duplicates of documents

5. How benefits auditor of timely preparation of audit documentation?

[RTP May-24] [May-24] [RTP Jan-25]
1. Auditor shall prepare audit documentation on a timely basis.

2. Preparing sufficient and appropriate audit documentation on a timely basis

helps to enhance the quality of the audit and
facilitates effective review and evaluation of audit evidence obtained and conclusions
reached.

3. Documentation prepared after the audit work has been performed is likely to be less
accurate than the documentation prepared at the time of such work is performed.

6. Write about completion memorandum or audit documentation summary?

[RTP May-24]

1. Auditor may consider, it helpful to prepare and retain as part of the audit
documentation
A summary that describes: (known as a completion memorandum)
 The significant matters identified during the audit and
 How they were addressed.

2. The Preparation of such a summary may

a. Facilitates effective & efficient review and inspection of the audit documentation,
particularly for large and complex audits.
b. Assist the auditor’s consideration of the significant matters.
c. Help’s the auditor to consider
whether there is any individual SA objective that the auditor cannot achieve
that would prevent the auditor from achieving the overall objectives of the auditor.

7. Meaning of audit file and how the auditor shall assembly of final audit file?

A. Audit File: One or more folders or other storage media, in physical or electronic form,
containing the records that comprise the audit documentation for a specific
engagement.
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DOCUMENTATION
B. Assembly of final audit file as per SA 230: [May-24] [RTP Jan-25 & 26] [MTP Jan-25-I & II]
Auditor shall assemble the AD in an audit file and complete the administrative
process of assembling the final audit file on a timely basis after the date of auditor’s
report.

1. SQC 1 requires firms

to establish policies and procedures for the timely completion of the assembly of
audit files.

An appropriate time limit within which to complete the assembly of the final audit
file is ordinarily not more than 60 days after the date of the auditor’s report.

2. Completion of the assembly of the final audit file after the date of the auditor’s
report is an administrative process that does not involve
the performance of new audit procedures or drawing of new conclusions.

However, changes may be made to the AD during the final assembly process,
if they are administrative in nature. [MTP Sep-24-II]
Examples of such changes include:
a. Deleting or discarding superseded documentation.
b. Sorting, collating and cross-referencing working papers.
c. Signing off on completion checklists relating to the file assembly process.
d. Documenting audit evidence that the auditor has obtained, discussed and
agreed with the relevant members of the ET before the date of the auditor’s
report.

3. After the assembly of the final audit file has been completed,
Auditor shall not delete or discard AD of any nature before the end of its retention
period.

SQC 1 requires firms

to establish policies and procedures for the retention of engagement documentation.
The retention period for audit engagements
ordinarily is no shorter than 7 years from the date of the auditor’s report, or
if later, the date of the group auditor’s report...

4. SQC 1 also provides that, [MTP Sep-24-II]

unless otherwise specified by law or regulation, AD is the property of the auditor.

He may at his discretion, make portions of, or extracts from, AD available to clients,
provided such disclosure does not undermine the validity of the work performed, or,
in the case of assurance engagements, the independence of the auditor or of his
personnel.

8. Documentation of significant matters and examples of significant matters?

[RTP Sep-24]

A. Judging the significance of a matter requires an objective analysis of the facts and
circum.

B. Some examples of significant matters include:

1. Matters that give rise to significant risks.

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DOCUMENTATION
2. Circumstances that cause the auditor significant difficulty in applying necessary AP.

3. Results of audit procedures indicating that

a. Financial statements could be materially misstated, or
b. A need to revise the auditor’s previous assessment of the RMM and
the auditor’s responses to those risks.

4. Findings that could result in a

modification to the audit opinion or the inclusion of an emphasis of MP in the AR.

C. An important factor in determining the FCE of AD of significant matters is

the extent of professional judgment exercised in performing work and evaluating the
results.

Documentation of the significant professional judgments made, where significant,

serves
to explain the auditor’s conclusions and to reinforces the quality of the judgment.

Such matters are of particular interest to those responsible for reviewing AD, including
those carrying out subsequent audits, when reviewing matters of continuing
significance.

D. Some examples of circumstances in which it is appropriate to prepare AD relating

to the use of professional judgement include, where matters and judgements are
significant:

1. Rationale for the auditor’s conclusion

when a requirement provides that the auditor ‘shall consider’ certain info. or factors
and that consideration is significant in the context of the particular engagement.

2. Basis for the auditor’s conclusion

on the reasonableness of areas of subjective judgements.
(for Eg; reasonableness of significant accounting estimates).

3. Basis for the auditor’s conclusions

about the authenticity of a document when further investigation is undertaken,
in response to conditions identified during the audit
that caused the auditor to believe that the document may not be authentic.
(such as making appropriate use of an expert or of conformation procedure)