B4

• Audit documentation

  • Provides sufficient records for the basis of the audit report
  • Proves that the audit was planned and performed correctly
  • Enables an experienced auditor with no previous connection to the audit to understand the nature of the audit procedures used, the results and evidence obtained, significant matters and conclusions, and significant professional judgements
• Audit documentation should repeat and allow an experienced auditor (with no previous client knowledge) to know exactly what work was performed and what conclusions reached
• Audit documentation should record the nature, timing and extent of the audit procedures performed, the results of procedures, and the conclusions drawn
• The auditor's reasoning on all significant, judgemental matters should be clear in the audit documentation
• Working papers


  • Crucial for auditors to defend their approach, work performed, and conclusions in a court of law
  • Without comprehensive working papers, auditors would find it extremely difficult to justify their actions and decisions
• Working papers


  The foundation that allows auditors to plan, execute, and substantiate the audit in a robust and defensible manner
• Contents of Audit Documentation


  • Planning
  • Audit work carried out on each section of the financial statements (e.g. Non Current Assets, Inventory)
  • Completion and review
• What must be documented


  • Items tested
  • Who did the testing
  • When the testing was done
  • Who reviewed the work and when
  • Discussion of all significant matters with management
• Types of Audit Documentation


  • Planning Documentation (Strategy, plan, risk analysis)
  • Audit programmes
  • Summary of significant matters
  • Letters of confirmation / representation
  • Correspondence
  • Permanent and current audit files
• Permanent audit files


  Contain information of continuing importance to the audit
• Contents of Permanent Audit Files


  • Names of management, those charged with governance, shareholders
  • Systems Information
  • Business and Industry background
  • Title deeds
  • Contracts
  • Copy of the company's legal constitution
  • Board minutes of continuing relevance
  • Previous years' signed accounts, analytical procedures and management letters
  • Engagement letters
• Current audit files


  Contain information which is relevant to the current year's audit
• Contents of Current Audit Files

  • Financial statements
  • Accounts checklists
  • Management accounts details
  • Reconciliations of management and financial accounts
  • A summary of unadjusted misstatements
  • Report to partner including details of significant events and misstatements
  • Review notes
  • Audit planning memorandum
  • Time budgets and summaries
  • Representation letter
  • Management letter
  • Notes of board minutes
  • Communications with third parties such as experts or other auditors
  • Working papers covering each audit area
• Contents of Working Papers


  • A lead schedule including details of the figures to be included in the financial statements
  • Problems encountered and conclusions drawn
  • Audit programmes
  • Risk assessments
  • Sampling plans
  • Analytical procedures
  • Details of substantive tests and tests of control
• Quality control procedures


  1. Audit work performed by each assistant should be reviewed by personnel of appropriate experience to consider whether:

  2. The work has been performed in accordance with the audit plan.

  3. The work performed and the results obtained have been adequately documented.

  4. Any significant matters have been resolved or are reflected in audit conclusions.

  5. The objectives of the audit procedures have been achieved.

  6. The conclusions expressed are consistent with the results of the work performed and support the audit opinion.
• Hot Reviews


  Independent reviews carried out by another audit partner prior to the signing of the audit report
• Cold Reviews


  Independent reviews carried out by another audit partner in the firm after the audit report has been issued
• When the audit work has been completed and reviewed, the audit engagement partner completes an overall review of the working papers to ensure that he is able to issue his opinion
• Auditor owns the working papers


  Auditor controls them and not the client
• Auditor owning working papers


  • Helps keep the auditor independent
• Auditor must be careful if they include copies of client generated items</b>
• Working papers


  Must be kept secure
• Working papers are lost

  All would need to be recreated
• Working papers include sensitive and confidential information
• Prevention of any unauthorised alterations to working papers is important
• IT based audit systems


  • Laptops are very susceptible to theft, not just for the contents, but for the machine itself
  • Unauthorised alterations are harder to spot
• Ensuring security of IT based audit systems


  1. Laptops should always be locked away securely or taken home by the audit team

  2. IT based systems should be subject to passwords, encryption and back up procedures
• Retention of working papers


  • Audit files should be updated and finished no later than 60 days after the report
  • They should then normally be kept for at least 5 years
• Arrangements for retaining working papers


  1. Secure storage

  2. Archiving of the old files

  3. IT back ups
• Previous Quality control procedures