Chapter 6- Audit Documentation
➢ Definition of Audit Documentation:
Audit Documentation refers to the record of audit procedures performed, relevant audit evidence
obtained, and conclusions the auditor reached.
➢ Objective of the Auditor:
Auditor should prepare documentation that provides:
• A sufficient and appropriate record of the basis for the auditor’s report; and
• Evidence that the audit was planned & performed in accordance with SAs and applicable legal and
regulatory requirements,
➢ Purpose of Audit Documentation
The following are the purpose of Audit documentation:
1) Assisting engagement team to plan and perform the audit.
2) Assisting engagement team to direct and supervise the audit work, and to discharge their review
responsibilities.
3) Enable the engagement team to be accountable for its work.
4) Retaining a record of matters of continuing significance to future audits.
5) Enable conduct of quality control reviews & inspections (SQC -1)
6) Enable conduct of external inspections
➢ Form, Content and Extent of Audit Documentation
▪ Audit Documentation should be sufficient to enable an experienced auditor, having no previous
connection with the audit, to understand:
a) NTE of the audit procedures performed.
b) Results of the audit procedures performed & audit evidence obtained
c) Significant matters arising during the audit & the conclusions reached thereon and
d) Significant professional judgements made in reaching those conclusions.
▪ Further in documenting the NTE of audit procedures performed, the auditor shall record:
a) Characteristics of the specific items or matters tested (Significant findings)
b) Who performed audit work & date such work was completed; and
c) Who reviewed audit work performed & date and extent of such review.
▪ Document discussions of significant matters with management, TCWG, and others, including the nature
of matter and when and with whom the discussions took place.
➢ Factors affecting Form, content and extent of audit documentation
1) Size and complexity of the entity.
2) Nature of the audit procedures to be performed.
3) Identified ROMM.
4) Significance of the audit evidence obtained.
5) Nature and extent of exceptions identified.
6) Document a conclusion or the basis for a conclusion not readily determinable from the documentation
of the work performed or audit evidence obtained.
7) Audit methodology and tools used.
➢ Timely Preparation of Audit Documentation
Preparing sufficient and appropriate audit documentation on a timely basis helps to enhance the quality
of the audit and facilitates the effective review and evaluation. Documentation prepared after the audit
work has been performed is likely to be less accurate than documentation prepared at the time such
work is performed.
➢ Audit File
Audit file may be defined as 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.
➢ Assembly of the Final Audit File
Auditor to assemble the audit documentation in an audit file and complete the administrative process
of assembling the final audit file on a timely basis after the date of the auditor’s report.
• 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. Assembly is an administrative process and
does not involve performance of new audit procedure.
• Changes may be made to the Audit documentation during the final assembly process, if they are
administrative in nature. Eg. Deleting/discarding superseded documentation, Sorting, collating & cross-
referencing, signing off on completion checklists,Documenting audit evidence obtained after discussing
& agreeing with team.
• Auditor shall not delete/discard documentation after completing assembly of Audit file till end of its
retention period.
• SQC 1 requires firms to establish policies and procedures for retention of engagement documentation.
Retention period should not be shorter than 7 years from the auditor’s report date.
➢ Documentation of Significant Matters and Related Significant Professional Judgements
Matters that give rise to significant risks.
• Results of audit procedures indicating (a) that the FS could be materially misstated, or (b) a need to
revise the auditor’s previous assessment of the ROMM & the auditor’s responses to those risks.
• Circumstances that cause the auditor significant difficulty in applying necessary audit procedures.
• Findings that could result in a modification to the audit opinion or the inclusion of an EOM Para
Documentation of the professional judgements made, serves to explain the auditor’s conclusions &
reinforce the quality of the judgement. Such matters are of particular interest to those responsible for
reviewing audit documentation, including those carrying out subsequent audits, when reviewing
matters of continuing significance.
Examples where the matters and judgements are significant:
• NTE of Audit procedures
• Determining Materiality levels
• Determining reasonableness of management’s estimates
• Sufficiency and Appropriateness of Audit Evidence
• Forming of Conclusions and opinion
➢ Completion Memorandum or Audit Documentation Summary
The auditor may prepare and retain as part of the audit documentation a summary that describes-
• the significant matters identified during the audit and
• how they were addressed.
Such a summary may facilitate
• Effective and efficient review and inspection of the audit documentation of large and complex audits.
• Assist auditor’s consideration of the significant matters.
• Whether there is any individual relevant SA objective that the auditor cannot achieve that prevent the
auditor from achieving the overall objectives of the auditor
➢ Ownership of Audit Documentation
• SQC-1 provides that audit documentation is the property of the auditor.
He may at his discretion, make portions of, or extracts from, audit documentation 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.