[FAQs] on SA 230 | Audit Documentation | Part-2

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Audit documentation is considered the backbone of an audit. The work that the auditor performs, the explanations given to the auditor and the conclusions arrived at, all are evidenced by documentation. SA 230 deals with the responsibility of the auditor to prepare audit documentation for an audit of financial statements. The objective behind the preparation of the audit documentation provides:

(a) a sufficient and appropriate record of the basis for the auditor’s report;

(b) evidence that the audit was planned and performed in accordance with the SAs and applicable legal and regulatory requirements.

To make it easier to understand the stipulations under SA 230, the standard has been broken down into a Q&A format.

FAQ 1. What should the auditor record in documenting the nature, timing and extent of audit procedures performed?

SA 220 requires the auditor to review the audit work performed through review of the audit documentation. The requirement to document the reviewer of audit work does not mean that every working paper needs to include review evidence. Instead, it implies documenting which audit work was reviewed, who reviewed it, and the review date. This documentation ensures adequate review and oversight of the audit work, ensuring the accuracy and reliability of the audit results.

FAQ 2. What will the auditor do when it is necessary to depart from a relevant requirement in a SA?

When departing from a relevant requirement in a SA, the auditor should document the alternative audit procedures performed, how they accomplish the objective, and the rationale behind the departure. The requirements outlined in SAs are intended to help auditors achieve their objectives, including the overall goal of the audit. As a result, compliance with relevant requirements outlined in the SAs is typically required unless there are exceptional circumstances warranting a departure.

FAQ 3. When an auditor discovers information that conflicts with their final conclusion about a significant matter, what documentation should they prepare?

According to para 11 of SA 230, if the auditor identifies information that conflicts with their final conclusion on a significant matter, they must document how they addressed the inconsistency. However, this does not mean that the auditor needs to keep documentation that is outdated or incorrect.

FAQ 4. When should the auditor complete the administrative process of assembling the final audit file?

The timely completion of the assembly of the final audit file is important and should be done in accordance with the policies and procedures established by the firm as required by SQC 1. Generally, the auditor should aim to complete the assembly of the final audit file within 60 days of the date of the auditor’s report.

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