Study Circle 4 October 2009 SA 230 - Documentation.
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Transcript of Study Circle 4 October 2009 SA 230 - Documentation.
Study Circle
4 October 2009
SA 230 - Documentation
AgendaWelcome & Introduction
Form and Content
Importance of Documentation
Ownership and Custody
Elements of an Audit File
Referencing financial statements
Illustration
Assembling the audit file
Changes to documentation…after report date
Conclusion
Welcome & Introduction
SA 200 – Basic Principles Governing an Audit
International Standards on Auditing (ISA 23)
Standards on Auditing (SA) - India
What are working papers?• Prepared and retained as evidence gathered in
connection with an audit to support opinion• Aids planning and performance• Supervision & Review
Form and Content
Purpose: Financial Statement Assertions
Scope
Nature, timing and extent
Conclusions
Should be ‘contemporaneous’
Form and Content (cont’d)
Driven by:• Form of report
• Nature of engagement
• Complexity of client
• Reliance on controls
• Record maintenance
Form and Content (cont’d)
Types:• Permanent file(s)
• Current Audit file(s)
Importance
Re-performance Standards
Audit Evidence gathered
Should be completed before issuance of opinion
Assistance in reviews: - Peer Reviews- External Reviews- Internal risk & quality reviews
Ownership & Custody
Property of the Auditor
Should be addressed in the engagement letter
Archival of files
Period of retention of work papers
Elements of an audit file
Lead schedule
Audit work steps – see illustration
Coaching notes
Critical matters – judgements and estimates
Hard copy information and evidence
Referencing financial statements
Number all pages
Reference each line item on balance sheet and profit & loss to the appropriate lead schedule
Foot/ cast
Agree prior year information
Agree note disclosures to face statements
Check typos/ spelling mistakes
Read through for language and contextual errors
Check other information (e.g. statutory records)
Include tick-mark legend
IllustrationStep
Engagement Name
Period End:31 December 200x
Status: Pending or Final
Title: Confirm selected bank accounts and special arrangements
Audit Objectives: Completeness, Accuracy, Existence/Occurrence, Rights and Obligations
Paper File?
Details
Illustration (cont’d)Tailored Procedures:
When performing confirmation procedures, we should maintain control over the process of selecting those to whom a request will be sent, the preparation and sending of confirmation requests, and the responses to those requests. Second requests and, where warranted, third requests should be mailed when responses to confirmation requests have not been received within a reasonable time.
a) Select deposit bank accounts for confirmation in order to obtain the desired level of assurance. Bank confirmations should be sent to banking relationships to identify accounts not included in the general ledger.
Illustration (cont’d)For confirmations returned:
1. agree account information and account balance to comparative summary;
2. investigate all discrepancies reported or questions raised in review and determine whether any adjustments are necessary; and
3. assess impact of special arrangements or restrictions identified and determine whether disclosure is appropriate.
4. We should perform alternative audit procedures where no response is received to a confirmation request. The alternative audit procedures should be such as to provide audit evidence about the assertions that the confirmation request was intended to provide.
Illustration (cont’d)Results of work done:
a)
1) Find below the detail of the bank confirmation received:
Account number Account name Book Balance Statement Difference
8700000 Operating account 1 2,567,980 2,145,908 422,072
8700001 Payroll account 10,345 10,400 (55)
8700002 Loan account (345,098) (345,098) 0
8700004 Investment 4,000,000 4,000,000 0
2) Done.
3) No issues.
4) Not applicable – all confirmations were received.
Assembling the audit fileThe auditor should complete the assembly of the final auditfile on a timely basis after the date of the auditor’s report.
Administrative work that can be performed Deleting or discarding superseded documentation. Sorting, collating and cross-referencing working papers. Signing off on completion checklists relating to the file
assembly process.
Document: When and by whom they were made, and reviewed; The specific reasons for making them; and Their effect, if any, on the auditor’s conclusions.
Changes to documentation…..in rare circumstances, after the date of the Auditor’s
Report:
When exceptional circumstances arise after the date of the auditor’s report that require the auditor to perform new or additional audit procedures or that lead the auditor to reach new conclusions, the auditor should document:
- The circumstances encountered;- The new or additional audit procedures performed,
audit evidence obtained, and conclusions reached; and- When and by whom the resulting changes to audit
documentation were made, and (where applicable) reviewed.
Conclusion
“Tell the Story”