Introduction to Audit Documentation
Audit documentation stands for the documentation or records of the procedures that the auditors have conducted, the audit evidence that they got, as well as the conclusion they have made according to the evidence they acquire. Sometimes, people would call audit documentation as an audit working paper.
Some examples of internal audit documentation are the internal control documents which the auditor has prepared in Microsoft Excel, Microsoft Word or various other application.
Another example which describes audit documentation will be the working paper which an auditor will usually prepare to record and test expenses for depreciation.
Essential information in audit documentation:
For all auditors in the audit firms in Johor Bahru, audit documentation is vital, specifically in the quality control area of the audit. ISA demands the auditors to prepare the audit documentation in the form where other senior auditors who do not participate in the audit engagement before can understand the work performed when he evaluates the documents.
Listed below are some of the essential information that the auditor should include in the audit documentation:
– The nature of data or information an auditor has recorded or prepared
– Timing, which includes the audit period and the date of preparation
– Name of the auditor
– The extent of the audit procedures an auditor has performed follow the International Standards on Auditing (ISA) as well as applicable regulatory requirements.
– In the audit working papers, an auditor should record clearly and correctly the proof that an auditor has acquired, the audit approaches they have implemented for testing, as well as the result of testing. This is to enable the reviewer to carry out quality review easily and to prove that the auditor is applying the related standards.
– Throughout an audit, an auditor may discover the crucial problems about the financial statements (such as inappropriate double entries etc.), their processes and ethics. The auditor needs to record these items clearly.
– Some sampling or testing demand auditors to utilise their professional judgements and to record these judgements is vital.
The Purpose of Audit Documentation:
Before the auditor could conclude on financial statements to determine if they contain any material misstatement or whether it is in compliance with the Financial Reporting Standards (Also see FRS 1), the auditor has to ensure that they possess adequate evidence to give their audit opinion (Also see Types of Audit Opinion).
Some people often call adequate evidence mentioned above as sufficient and appropriate evidence. Hence, audit documentation plays a vital role in determining whether the audit work can succeed or not.
Listed here are the advantages of preparing audit documentation:
– It provides evidence to support auditor’s conclusion about the attainment of the general goal.
– It gives evidence whereby the auditor has planned and conducted the audit based on ISA as well as other regulatory requirements.
– It helps the engagement team in planning and performing the audit.
– It aids employees who are responsible for supervision in directing, supervising, as well as reviewing audit work.
– It makes the staff responsible for their work.
– It enables the employees to keep records of matters that possess continuing importance.
– It allows a company to perform external and internal quality control analysis and examination.