5. documentation sep 2013
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Transcript of 5. documentation sep 2013
The auditor should document
matter which are important in
providing evidence to support
the audit opinion and
evidence that the audit was
carried out in accordance
with ISAs.
The material (working papers)prepared by and for or obtainedand retained by the auditor inconnection with the performance ofaudit.
Working papers may be in the formof data stored on paper, film,electronic media or other media.
Working Papers are the written,
private material which an auditor
prepares for each audit to
describe the accounting
information received from his
client, the methods of examination
used, conclusions drawn and the
financial statements prepared.
Working Papers:
• Assist in the planning and performance of
the audit
• Assist in the supervision and review of the
audit work
• Record the audit evidence resulting from
the audit work performed to support the
auditor’s opinion
• Assist in the absence of original records to
support professional opinion
• Tool to defend from any charge or suit against
the auditor for negligence
• It helps in organizing and coordinating of all
phase of the audit work
• Enable the auditor to supervise the work of
audit assistants adequately
• Provides the permanent records of the audit
procedures used and the client data examined
• Provide evidence that a proper evaluation of
internal control was carried out by the auditor
The auditor should prepare workingpapers which are sufficiently completeand detailed to provide an overallunderstanding of the audit.
It should include information onplanning the audit work, the nature,timing and extent of the auditprocedures performed, the resultsthereof, and the conclusions drawnfrom the audit evidence obtained.
Form and content of working papers areaffected by matters such as:
Nature of Engagement
Form of the Auditor’s Report
Nature and Complexity of Business
Entity’s Accounting and InternalControl System
Direction, supervision and review ofthe work performed by the assistants
Audit Methodology and Technologyused
The extent of working papers is a
matter of professional judgment
since it is neither necessary nor
practical to document every matter
the auditor consider.
Auditor should consider what would
be necessary to provide another
auditor with an understanding of the
work performed and the basis of the
principle decisions taken out.
1. Trial balance, adjusting entries ,schedules , reconciliation, summaries ofdata, comments and explanations.
2. Analysis of transactions and balances3. Analysis of significant ratios and trends.4. Information about the legal and
organizational structure of the entries .5. Copies of important legal documents ,
agreements and minutes.
6.Information about the industry,
economic environment and
legislative environment within which
the entity operates.
7.Evidence of the planning process
including audit program and any
change thereto.
8.Evidence of the auditor's
understanding of the accounting and
internal control systems.
9.Evidence of internal control risk
assessment and any revision thereto.
10.Evidence of the nature , timing , and
extent of audit procedure performed
and the results of such procedures.
11.Evidence of the auditor’s
considerations of the work of internal
auditing and conclusions reached.
12.An indication as to who performed theaudit procedures and where they wereperformed.
13.Copies of communication with otherauditors and third parties.
14.Copies of letter or notes concerningaudit matters discussed with the entity.
15.Letters of presentation from entity16.Copies of financial statements andauditor’ report
1. Permanent File:
All documents containing background
information about client of permanent
nature are filed on the file. This file
should carried forward from year to year
and should be kept up to date .
2. Current File:
It contains the audit program and
working papers relating to the year under
review.
Copies of memorandum and article of
association
Extract from important agreements
Particulars of title deeds and similar
documents
Address of registered office, factories
and branches
An organizational chart of the
business.
Flow charts and specimen of the
client's accounting documents
A list of accounting records
Declaration concerning the
submission of accounting
manuals, instructions for the
preparation of the accounts and
index of accounts classification
Internal control questionnaireA copy of letter of engagement.Records of audit work on statutory
recordsRecord of inspection of title deeds, lease ,Notes of internal audit.Copy of instructions to banker issued by
the client.Statement of reserves.Note of principle accounting policies .
The auditor should adopt appropriateprocedures for maintaining theconfidentiality and safe custody of theworking papers and for retaining themfor a period sufficient to meet theneeds of the practice and inaccordance with the legal andprofessional requirements of recordretention.
Working papers are the propertyof the auditor. Although portionsof or extracts from the workingpapers may be made available tothe entity at the discretion of theauditor, they are not a substitutefor the entity’s accountingrecords.