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SA 230 (R EVISED ) A UDIT D OCUMENTATION PRESENTED BY: JAGRATI KOOKADA DATE : 21 st FEBRUARY 2014 “The skill of an accountant can always be ascertained.

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Presentation on theme: "SA 230 (R EVISED ) A UDIT D OCUMENTATION PRESENTED BY: JAGRATI KOOKADA DATE : 21 st FEBRUARY 2014 “The skill of an accountant can always be ascertained."— Presentation transcript:

1 SA 230 (R EVISED ) A UDIT D OCUMENTATION PRESENTED BY: JAGRATI KOOKADA DATE : 21 st FEBRUARY 2014 “The skill of an accountant can always be ascertained by an inspection of his working papers”

2 C ONTENTS OF THE P RESENTATION 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

3 W HAT IS A S TANDARD 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.

4 W HY D OCUMENTATION ? 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

5 C ONTINUE ….. 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.

6 W HAT IS D OCUMENTATION ? Terms such as “working papers” or “work papers” are also used sometimes It is maintained at 3 stages of audit work: Audit Planning Audit Implementation Audit Reporting Documentation takes record of :  Audit procedures performed  Relevant audit evidence obtained  Conclusions reached

7 Assist team in planning & performing Assist supervision & direction Assist QC review Create accountability Record matters of continuing significance Assist external inspection SA 230 : N ATURE & P URPOSE

8 SA 230: O BJECTIVE Prepare documentation that provides Sufficient & Appropriate record of basis of auditor’s report Evidence that audit was planned and performed in accordance with SAs

9 F ORM OF A UDIT D OCUMENTATION 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.

10 C ONTENTS OF A UDIT D OCUMENTATION A 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

11 P ERMANENT A UDIT F ILE − 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.

12 C URRENT F ILES 1. Routine Audit Opening Trial Balance Sales/Purchase Vouching Expense/Income Vouching Salary Cash/Bank Vouching Journal Vouchers Debit & Credit Notes FIRC’s 26AS

13 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

14 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

15 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)

16 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

17 P OINTS TO BE C ONSIDERED 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.

18 T HINGS 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

19 R ETENTION OF AND S UBSEQUENT C HANGES TO A UDIT D OCUMENTATION The auditor must retain engagement documentation for a period not shorter than 10 years from the date of the auditor’s report.



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