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“The skill of an accountant can always be ascertained by an inspection of his working papers”. SA 230 (Revised) Audit Documentation. PRESENTED BY: JAGRATI KOOKADA DATE : 21 st FEBRUARY 2014. Contents of the Presentation. Meaning and purpose of Standards Why documentation is required - PowerPoint PPT Presentation
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SA 230 (REVISED)AUDIT DOCUMENTATION
PRESENTED BY: JAGRATI KOOKADA
DATE : 21st FEBRUARY 2014
“The skill of an accountant can always be ascertained by an inspection of his working papers”
CONTENTS OF THE PRESENTATION Meaning and purpose of Standards Why documentation is required What is Documentation Nature & Purpose Objective Form of Audit Documentation Contents of Audit Documentation Points to be considered Things to be kept in mind Retention of Documents
WHAT IS A STANDARD AND ITS PURPOSE…. A standard is a document that establishes uniform engineering or
technical specifications, criteria, methods, processes or practices.
Attributes Performance Implementation
Provides basic principles of audit as it should be. Provide a framework for performing and promoting audit activities. Establish the basis for the evaluation of audit and assurance
performance. Foster improved organizational processes and operations.
WHY DOCUMENTATION? Self- Defense in a Court of Law: Onus in a Court proceeding lies on
the auditor to prove that he was not professionally negligent in the performance of his duties.
Effective Audit: Documentation is the only way an auditor can prove to outsiders that an effective audit was planned and performed.
To assist as proof of audit evidence during the Peer Review Process
CONTINUE….. Records of the work performed and conclusions reached
regarding significant matters.
Evidence that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements.
WHAT IS DOCUMENTATION? Terms such as “working papers” or “work papers” are also used
sometimes It is maintained at 3 stages of audit work:
Audit PlanningAudit ImplementationAudit Reporting
Documentation takes record of :Audit procedures performedRelevant audit evidence obtainedConclusions reached
SA 230 : NATURE & PURPOSE
SA 230: OBJECTIVEPrepare documentation
that provides
Sufficient & Appropriate record of basis ofauditor’s report
Evidence that audit was planned and performed
in accordance with SAs
FORM OF AUDIT DOCUMENTATION The auditor should prepare audit documentation in such a
manner that it enables an experienced auditor having no previous connection with the engagement to review and testify as to the audit work performed and the related audit findings.
CONTENTS OF AUDIT DOCUMENTATIONA working file should be prepared and maintained in the manner as laid down below which is in accordance with the standard provided:Working papers are classified into two:− Permanent Audit File− Current Audit File
PERMANENT AUDIT FILE− It includes:− MOA & AOA /Deed /Bye Laws & Regulations in case of
Company/Firm/Co-operative Society.− Organizational Structure of the Client.− Copy of PAN/TAN Registration.− Record of communication with retiring auditor, i.e. NOC
from previous Auditor.
CURRENT FILES1. Routine Audit Opening Trial Balance Sales/Purchase Vouching Expense/Income Vouching Salary Cash/Bank Vouching Journal Vouchers Debit & Credit Notes FIRC’s 26AS
2. Balance Sheet Items Share Capital – Any fresh issue/buyback/bonus issue Loans – Secured & Unsecured Loans Statutory Liabilities – PF,PT,TDS,VAT/CST,ST Fixed Assets – Addition/Deletions Invoices Investments – Current & Non Current Outstanding & Prepaid Expenses – Invoices
3. Finalization Papers Inter Company Balance Details & Confirmations Balance Confirmation from Principal Creditors General Ledger Scrutiny – Trade Receivables, Payables etc Audit Observation CARO Checklist (if applicable) Tax Audit Clauses and their working
Expenses in Foreign Currency (if any) Audit Adjustment Sheet Comparative Analysis Sheet with Ratios and Trends Partners Review ITR Computation for the relevant AY Signed Closing Trial Balance Management Representation Letter (MRL)
4. ROC Documents− Appointment Letter of Auditors− Form 23B Filed− Audit Engagement Letter− List of Directors and Shareholders− Declaration from directors u/s 274(1)(g) − List of Partners with PSR− Minutes− ROC Forms Filed− Statutory Registers
POINTS TO BE CONSIDERED Audit Documentation may be recorded on paper or on electronic
or other media. The auditor may include abstract or copies of the client’s
records (for example, specific contracts and agreements) as part of documentation.
The auditor need not include in documentation incomplete records, previous copies of documents corrected for errors and duplicates of documents.
Oral explanations by the auditor do not represent adequate support for the work auditor performed but it may be used to clarify information contained in the audit documentation.
THINGS TO BE KEPT IN MIND…. Filing of working papers Proper numbering/sequencing of working papers Writing of Queries in detail Disposing of Queries – at staff/senior/partner level Discussing with seniors on matters of importance Working papers to be signed, dated and approved by relevant level of
audit staff Importance of depicting the client’s name, file number, accounting
period, area to be checked, audit staff involved
RETENTION OF AND SUBSEQUENT CHANGES TO AUDIT DOCUMENTATION
The auditor must retain engagement documentation for a period not shorter than 10 years from the date of the auditor’s report.
THANK YOU
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