AUD 2.02 - Documentation

  1. True / False: Audit documentation may be recorded on paper or on electronic or other media.
  2. True / False: Oral explanations of portions of the audit are sufficient for clarification of information included in the audit documentation
  3. True / False: The auditor should include superseded drafts of working papers and financial statements, notes that reflect incomplete or preliminary thinking, previous copies of documents corrected for typographical or other errors, and duplicates of documents until the audit is complete.
    • False
    • These records are not needed
  4. To whom do the workpapers belong: the client or the auditor?
    The auditor
  5. To whom can the auditor disclose the workpapers?
    The auditor cannot disclose the documents to anyone without client's permission or a court order
  6. When is sufficient appropriate audit documentation achieved?
    • When an experienced auditor, having no previous connection with the audit, can understand the significant professional judgments made in reaching conclusions on significant findings or issues arising during the audit, AND
    • To provide evidence of the auditor's basis for a conclusion about
    • ** the achievement of the overall objectives of the audit
    • ** that the audit was planned and performed in accordance with GAAS and applicable legal and regulatory requirements
  7. The audit documentation should consist of (not necessary to name them all)
    • Evidence that the accting records reconcile with the FS
    • Copies of abstracts, significant contracts, or agreements
    • Documentation of discussions w/mgmt or those charged with governance
    • Justification for a departure from a presumptively mandatory audit requirement, and how alternative procedures achieved the intent
    • How the auditor addressed any information inconsistent with the auditor's final conclusion
    • A trail demonstrating
    • ** the (NET) nature, extent, and timing of procedures performed in accordance with GAAS
    • ** which evidence was examined
    • ** significant findings or issues arising during the audit
    • ** how the auditor addressed inconsistent (contradictory) information
    • ** the conclusions reached
    • ** who performed the work, and the date completed
    • ** who reviewed the work, and the date of review
  8. Define the audit report release date
    The date the auditor grants the client permission to use the report
  9. What are the documentation retention requirements for nonissuers and issuers?
    • Nonissuers (SAS rules): 5+ years from report release date
    • Issuers (PCAOB rules): 7+ years from report release date
  10. Define the documentation completion date and what date is mandated for nonissuers and issuers?
    • The date that the audit documentation can no longer be altered or deleted, and any documents added after this date must be identified as such.
    • Nonissuers (SAS rules): within 60 days following the report release date
    • Issuers (PCAOB rules): within 45 days following the report release date
  11. Although specific content of the audit documentation will vary, which two file types must the documentation contain, and what are the contents of these files?
    • Permanent (continuous) file: contains items that will be of interest from year-to-year such as contracts, pension plans, stock options, bylaws, minutes of meetings, etc.
    • Current file: contains documentation applicable only to the year under audit.
  12. What types of information are typically contained in the Current file (don't need to know all of them).
    • Audit plan
    • FS
    • Auditor's report
    • Accounting items such as the working trial balance, adjusting journal entries, and reclassification entries
    • Letters of confirmation & their responses
    • Letters of representation
    • Workpapers prepared by either the entity for the auditor, or the auditor
    • Summaries of significant audit findings or issues
    • Records of tests of controls (design plus operating effectiveness)
    • Records of substantive tests (testing dollar balances)
  13. The engagement team uses tickmarks within their workpapers. What must be included on the document when tickmarks are used?
    A legend
  14. What is the objective of detailed substantive testing?
    To detect material misstatement
  15. The auditor performed a specific audit procedure, but there is no documentation to support it. What is the PCAOB's response to this situation?
    • Undocumented audit information is written up by the PCAOB as a deficiency.
    • "If it isn't documented - it didn't happen" -- from the medical world
  16. What information is included in the Audit Program document?
    Detailed procedures to be performed by the auditor
Card Set
AUD 2.02 - Documentation
Becker Review 2017