SA 230 (REVISED)AUDIT DOCUMENTATION

PRESENTED BY: JAGRATI KOOKADA

DATE : 21st FEBRUARY 2014

“The skill of an accountant can always be ascertained by an inspection of his working papers”

CONTENTS OF THE PRESENTATION Meaning and purpose of Standards Why documentation is required What is Documentation Nature & Purpose Objective Form of Audit Documentation Contents of Audit Documentation Points to be considered Things to be kept in mind Retention of Documents

WHAT IS A STANDARD AND ITS PURPOSE…. A standard is a document that establishes uniform engineering

or technical specifications, criteria, methods, processes or practices.

Attributes Performance Implementation

Provides basic principles of audit as it should be. Provide a framework for performing and promoting audit

activities. Establish the basis for the evaluation of audit and assurance

performance. Foster improved organizational processes and operations.

WHY DOCUMENTATION?

Self- Defense in a Court of Law: Onus in a Court proceeding lies

on the auditor to prove that he was not professionally negligent in

the performance of his duties.

Effective Audit: Documentation is the only way an auditor can

prove to outsiders that an effective audit was planned and

performed.

To assist as proof of audit evidence during the Peer Review Process

CONTINUE….. Records of the work performed and conclusions reached

regarding significant matters.

Evidence that the audit was planned and performed in

accordance with SAs and applicable legal and regulatory

requirements.

WHAT IS DOCUMENTATION? Terms such as “working papers” or “work papers” are also used

sometimes

It is maintained at 3 stages of audit work:

Audit Planning

Audit Implementation

Audit Reporting

Documentation takes record of :Audit procedures performed

Relevant audit evidence obtained

Conclusions reached

SA 230 : NATURE & PURPOSE

SA 230: OBJECTIVEPrepare documentation

that provides

Sufficient & Appropriate record of basis ofauditor’s report

Evidence that audit was planned and performed

in accordance with SAs

FORM OF AUDIT DOCUMENTATION

The auditor should prepare audit documentation in such a

manner that it enables an experienced auditor having no

previous connection with the engagement to review and

testify as to the audit work performed and the related audit

findings.

CONTENTS OF AUDIT DOCUMENTATION

A working file should be prepared and maintained in the

manner as laid down below which is in accordance with

the standard provided:

Working papers are classified into two:

− Permanent Audit File

− Current Audit File

PERMANENT AUDIT FILE− It includes:

− MOA & AOA /Deed /Bye Laws & Regulations in case of

Company/Firm/Co-operative Society.

− Organizational Structure of the Client.

− Copy of PAN/TAN Registration.

− Record of communication with retiring auditor, i.e. NOC

from previous Auditor.

CURRENT FILES1. Routine Audit Opening Trial Balance Sales/Purchase Vouching Expense/Income Vouching Salary Cash/Bank Vouching Journal Vouchers Debit & Credit Notes FIRC’s 26AS

2. Balance Sheet Items Share Capital – Any fresh issue/buyback/bonus issue Loans – Secured & Unsecured Loans Statutory Liabilities – PF,PT,TDS,VAT/CST,ST Fixed Assets – Addition/Deletions Invoices Investments – Current & Non Current Outstanding & Prepaid Expenses – Invoices

3. Finalization Papers Inter Company Balance Details & Confirmations Balance Confirmation from Principal Creditors General Ledger Scrutiny – Trade Receivables, Payables etc Audit Observation CARO Checklist (if applicable) Tax Audit Clauses and their working

Expenses in Foreign Currency (if any) Audit Adjustment Sheet Comparative Analysis Sheet with Ratios and Trends Partners Review ITR Computation for the relevant AY Signed Closing Trial Balance Management Representation Letter (MRL)

4. ROC Documents− Appointment Letter of Auditors− Form 23B Filed− Audit Engagement Letter− List of Directors and Shareholders− Declaration from directors u/s 274(1)(g) − List of Partners with PSR− Minutes− ROC Forms Filed− Statutory Registers

POINTS TO BE CONSIDERED Audit Documentation may be recorded on paper or on electronic

or other media.

The auditor may include abstract or copies of the client’s

records (for example, specific contracts and agreements) as part

of documentation.

The auditor need not include in documentation incomplete

records, previous copies of documents corrected for errors and

duplicates of documents.

Oral explanations by the auditor do not represent adequate

support for the work auditor performed but it may be used to

clarify information contained in the audit documentation.

THINGS TO BE KEPT IN MIND…. Filing of working papers Proper numbering/sequencing of working papers Writing of Queries in detail Disposing of Queries – at staff/senior/partner level Discussing with seniors on matters of importance Working papers to be signed, dated and approved by relevant level of

audit staff Importance of depicting the client’s name, file number, accounting

period, area to be checked, audit staff involved

RETENTION OF AND SUBSEQUENT CHANGES TO AUDIT DOCUMENTATION

The auditor must retain engagement documentation for a period not shorter than 10 years from the date of the auditor’s report.

THANK YOU