AUDIT DOCUMENTATION

CHAPTER 6

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 LEARNING OBJECTIVES
1. IMPORTANCE OF AUDIT WORKING PAPERS
2. TYPES OF WORKING PAPERS
3. FORMAT OF AUDIT DOCUMENTATION
4. CONTROL AND RIGHTS TO THE AUDIT WORKING
PAPERS
5. CONFIDENTIALITY

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 DEFINITION
AUDIT DOCUMENTATION IS THE AUDITORS
PRINCIPAL RECORD OF THE WORK PERFORMED
AND THE BASIS FOR THE CONCLUSIONS IN THE
AUDITORS REPORT.
ISA 230 DEFINES AUDIT DOCUMENTATION AS:
@ RECORD OF AUDIT PROCEDURES PERFORMED
@RELEVANT AUDIT EVIDENCE OBTAINED
@CONCLUSIONS THE AUDITOR REACHED

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 WHAT ARE THE IMPORTANCE OF AUDIT
DOCUMENTATION?
ISA 230 STIPULATES THAT AUDITOR SHOULD PREPARE
WORK PAPERS TO SERVE 2 PURPOSES:
1. AS SUFFICIENT AND APPROPRIATE RECORD OF THE
BASIS FOR THE AUDITORS REPORT; AND
2. AS EVIDENCE THAT THE AUDIT WAS PERFORMED IN
ACCORDANCE WITH ISAs AND APPLICABLE LEGAL
AND REGULATORY REQUIREMENTS.

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 IN ADDITION.
AUDIT DOCUMENTATION OR WORK PAPERS ALSO
DOCUMENT THAT THE SCOPE OF THE AUDIT WAS
ADEQUATE FOR THE REPORT ISSUED.

AUDIT DOCUMENTATION ALSO FACILITATES THE

PLANNING, PERFORMANCE AND SUPERVISION OF
THE AUDIT ENGAGEMENT.

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 TYPES OF WORKING PAPERS
There are 2 types of working paper:
Permanent file
Current file

PERMANENT FILE
-Contain historical data about the client that are of
continuing relevance to the audit.
CURRENT FILE
-Include information and data related specifically to the
current years engagement.

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 TYPES OF WORKING PAPERS
Permanent File Current File
Copies of memorandum & Copy of FS & auditors
articles of association report
Chart of accounts Audit plan and audit
Organisational chart programs
Accounting manual Copies of, or excerpts
Copies of important
from, minutes of important
contract committee meetings
Working trial balance
Documentation of Internal
Control Working papers supporting
FS accounts.

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 FORMAT OF AUDIT DOCUMENTATION
THE USUAL FORMAT OF AUDIT DOCUMENTATION
CONTAINS 3 GENERAL CHARATERISTICS:

HEADING

INDEXING AND CROSS-REFERENCING

TICK MARKS

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HEADING
SHOULD INCLUDE NAME OF ENTITY,THE TITLE OF THE
WORKING PAPERS;YEAR END DATE.

INDEXING AND CROSS-REFERENCING

THE AUDIT DOCUMENTATION SHOULD BE

ORGANISED SO THAT MEMBERS OF THE AUDIT
TEAM/FIRM CAN FIND THE RELEVANT AUDIT
EVIDENCE

THERE MUST BE A STANDARDISED INDEXING AND

CROSS-REFERENCING OF AUDIT FILE
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 INDEXING AND CROSS-
REFERENCING
EG GENERAL WORK PAPERS LABELLED A,
INTERNAL CONTROL SYSTEMS WORKING
PAPERS LABELLED B, CASH WORKING
PAPERS LABELLED C. ETC

THIS PROCESS OF INDEXING AND CROSS-

REFERENCING PROVIDES A TRAIL FROM
THE FS TO THE INDIVIDUAL AUDIT
DOCUMENTS THAT A REVIEWER CAN EASILY
FOLLOW.

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 TICK MARKS/AUDIT TICKS
AUDITORS USE TICK MARKS TO DOCUMENT WORK
PERFORMED.

TICK MARKS ARE MADE BY THE AUDITOR NEAR, OR

NEXT TO, AN ITEM OR AMOUNT ON AN AUDIT
DOCUMENT.

THE TICK MARK SYMBOL IS TYPICALLY EXPLAINED

OR DEFINED AT THE BOTTOM OF THE AUDIT WORK
PAPER.

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 CONTROL AND RIGHTS TO THE AUDIT
WORKING PAPERS
Audit documentation is the property of
the auditor.

This includes not only audit documents

prepared by the auditor but also audit
documents prepared by the client at the
request of the auditors.

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 CONFIDENTIALITY
ALTHOUGH THE AUDITOR OWNS THE AUDIT
DOCUMENTS, THEY CANNOT BE SHOWN, EXCEPT
UNDER CERTAIN CIRCUMSTANCES, TO ANYONE
WITHOUT THE CLIENTS CONSENT.

THE CIRCUMSTANCES WOULD BE IF A

PROFESSIONAL ACCOUNTANT IS SERVED WITH A
SUBPOENA TO APPEAR IN COURT, HE HAS TO
ANSWER ANY QUESTIONS THAT ARE PUT TO HIM
AND PRODUCE ANY DOCUMENTS IN HIS
POSSESSION IF THE COURT DIRECTS HIM TO DO SO.

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