DOCUMENTATION GUIDELINE

One of the main functions of FRC is to promote quality in audit services and
documentation is considered as an indicator of audit quality. The purpose of this paper is to
highlight the fundamental principles to be followed by all licensed auditors with regards to
documentation in auditing

It has been observed from the practice reviews that compliance to ISA 230 was not being
complied as per the requirements of ISA 230 and other International Auditing Standards
making reference to documentation. Paragraph 8 of ISA 230 states that an auditor shall
prepare audit documentation that is sufficient to enable an experienced auditor, having
no previous connection with the audit, to understand:

The nature
The results, and
The conclusion of the work performed.

FRC in its endeavor to promote the quality of auditing found it necessary to prepare a
paper on documentation as guidance for the auditors to comply with all the documentation
requirement of all ISAs.

Audit documentation has the following characteristics:

Assists the auditor in planning and performing the audit;

Facilitates supervision and review of the work performed by assistants;
Helps in the evaluation of the audit evidence obtained and conclusion reached
before the auditors report is finalised;
Provides a record of matters of continuing relevance that can be simply updated
Provides a head start to the following year audit;
Helps to enhance the quality of the audit in terms of the quality of the auditors
judgments;
Helps to understand the rationale of the auditors conclusions;
Helps to enhance the logic and the clarity of thinking and last but not least;
Provides a record that may assist audit oversight authorities and others when
reviewing audit files.

Please note that this guideline is not a substitute of the International Auditing Standards
issued by IAASB.

During our review exercise more attention would be given to the compliance of
documentation of audit evidence and any other issues that may impact on the opinion of
the auditors report.

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Failing to comply with adequate and proper documentation may lead to wrong opinion
formed by the auditors.
THE FINANCIAL REPORTING ACT 2004

Guidelines made by the Council under Section 73 of

the Financial Reporting Act 2004

1. These guidelines may be cited as the Audit Documentation Guidelines 2009.

2. In these guidelines

Audit Documentation means the record of audit procedures performed, relevant

audit evidence obtained, and conclusions the auditor reached.

Audit file means one or more folders or other storage media, in physical or
electronic form, containing the records that comprise the audit documentation for a
specific engagement.

Auditor means licensed auditor.

Experienced auditor means an individual (whether internal or external to the firm)

who has practical audit experience, and a reasonable understanding of:

(i) Audit processes;

(ii) ISAs and applicable legal and regulatory requirements;
(iii) The business environment in which the entity operates; and
(iv) Auditing and financial reporting issues relevant to the entitys industry.

ISAs means International Standards on Auditing.

International Standards on Auditing means the Auditing Standards issued by

IAASB.

3. ISA 230 Audit Documentation deals with the auditors responsibility to prepare
audit documentation for an audit of financial statements.

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 AUDIT DOCUMENTATION GUIDELINE

INDEX

Page

1. Introduction 5

2. Scope 5

3. Nature and purposes of Audit Documentation 5

4. Audit documentation requirements 6

4.1 Form, Content and Extent of Audit Documentation 6

4.2 Form of documentation 7

4.3 Useful to Independent Auditor 7

4.4 Other Requirements 7

4.5 Departure from a relevant requirement 8

4.6 Matters arising after the date of auditors report 8

5. Assembly of Final Audit File 8

6. Application of this guideline 9

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1. Introduction

Audit documentation is the record of:

(i) audit procedures performed;

(ii) relevant audit evidence obtained; and
(iii) conclusions the auditor reached.

The purpose of this paper is to provide additional guidance on audit documentation

in the conduct of an audit.

For the purpose of this guidance paper, ISA 230 Audit Documentation will be of
particular importance. However, it should be noted that this paper should not be
taken as a substitute for ISA 230, but instead as additional guidance material.

2. Scope

This guideline shall be used by auditors in preparing documentation that provide

sufficient and appropriate record of the auditors work.

3. Nature and purposes of Audit Documentation

(i) Audit documentation provides:

o evidence for the auditors basis for a conclusion about the achievement of
the overall objectives of the auditor;

o evidence that the audit was planned and performed in accordance with ISAs
and applicable legal and regulatory requirements.

(ii) Audit documentation serves a number of additional purposes, including the

following:

o Assisting the engagement team to plan and perform the audit;

o Assisting members of the engagement team to direct and supervise the audit
work;

o Enabling the engagement team to be accountable for its work;

o Retaining a record of matters of continuing significance to future audits;

o Enabling a conduct of quality control reviews and inspections;

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 o Enabling the conduct of external inspections;

4. Audit documentation requirements

4.1 Form, Content and Extent of Audit Documentation

(i) The auditor must prepare audit documentation in connection with each engagement
conducted pursuant to the ISAs.

Documentation shall be prepared on a timely basis which helps to enhance the

quality of the audit and facilitates the effective review and evaluation of the
audit evidence obtained and conclusions reached before the auditors report is
finalised.

Audit documentation should be prepared in sufficient detail to provide a clear

understanding of its:

o Purpose;
o Source; and
o conclusions reached.

(ii) In documenting the nature, timing and extent of audit procedures performed, the
auditor shall record:

(a) the identifying characteristics of the specific items or matters tested;

(b) who performed the audit work and the date such work was completed;
(c) who reviewed the audit work performed; and
(d) the date and extent of such review.

(iii) Examples of audit documentation include:

o Memoranda;
o Notes of meeting with management, those charged with governance
and others;
o Analyses;
o Confirmations;
o Correspondence;
o Summaries of significant matters;
o Schedules;
o Checklists;
o Audit programs; and
o Letters of representation.

However, entitys accounting record cannot be substituted for the audit

documentation.

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(iv) Audit documentation should not include:

o Superseded drafts of working papers and financial statements;

o Notes that reflect incomplete or preliminary thinking;
o Previous copies of documents corrected for typographical or other
errors; and
o Duplicates of documents.

(v) Oral explanations by the auditor, on their own, do not represent adequate support
for the work the auditor performed or conclusions the auditor reached, but may be
used to explain or clarify information contained in the audit documentation.

4.2 Form of documentation

Audit documentation may be in the form of:

o Paper;
o Electronic files; or
o Other media.

4.3 Useful to Independent Auditor

Audit documentation must contain sufficient information to enable an experienced

auditor, having no previous connection with the engagement:

(a) to understand the nature, timing, extent, and results of the procedures
performed, evidence obtained, and conclusions reached; and

(b) to determine who performed the work and the date such work was
completed as well as the person who reviewed the work and the date of
such review.

4.4 Other Requirements

(i) Audit documentation provides evidence that the audit complies with the ISAs.

(ii) It is unnecessary for the auditor to document separately (as in a checklist, for
example) compliance with matters for which compliance is demonstrated by
documents included within the audit file. For example:

o The existence of an adequately documented audit plan demonstrates that

the auditor has planned the audit.

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 o The existence of a signed engagement letter in the audit file
demonstrates that the auditor has agreed the terms of the audit
engagement with management or, where appropriate, those charged with
governance.

o An auditors report containing an appropriately qualified opinion on the

financial statements demonstrates that the auditor has complied with the
requirement to express a qualified opinion under the circumstances
specified in the ISAs.

4.5 Departure from a relevant requirement

If the auditor judges it necessary to depart from a relevant requirement in an ISA,

the auditor shall document how the alternative audit procedures performed achieve
the aim of that requirement, and the reasons for the departure.

4.6 Matters arising after the date of auditors report

If, in exceptional circumstances, the auditor performs new or additional audit

procedures or draws new conclusions after the date of the auditors report, the
auditor shall document:

o The circumstances encountered;

o The new or additional audit procedures performed, audit evidence

obtained, and conclusions reached, and their effect on the auditors
report; and

o When and by whom the resulting changes to audit documentation were

made and reviewed.

5. Assembly of Final Audit File

(i) The auditor shall assemble the audit documentation in an audit file and complete
the administrative process of assembling the final audit file on a timely basis after
the date of the auditors report.

(ii) An appropriate time limit within which to complete the assembly of the final audit
file is ordinarily not more than 60 days after the date of the auditors report.

(iii) The completion of the assembly of the final audit file after the date of the auditors
report is an administrative process that does not involve the performance of new
audit procedures or the drawing of new conclusions.

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(iv) Changes may, however, be made to the audit documentation during the final
assembly process if they are administrative in nature. Examples of such changes
include:
o Deleting or discarding superseded documentation.

o Sorting, collating and cross-referencing working papers.

o Signing off on completion checklists relating to the file assembly

process.

o Documenting audit evidence that the auditor has obtained, discussed and
agreed with the relevant members of the engagement team before the
date of the auditors report.

(v) After the assembly of the final audit file has been completed, the auditor shall not
delete or discard audit documentation of any nature before the end of its retention
period.

(vi) The retention period for audit engagements ordinarily is not shorter than five
years from the date of the auditors report, or, if later, the date of the group
auditors report.

(vii) In circumstances where the auditor finds it necessary to modify existing audit
documentation or add new audit documentation after the assembly of the final audit
file has been completed, the auditor shall, regardless of the nature of the
modifications or additions, document:

o The specific reasons for making them; and

o When and by whom they were made and reviewed.

6. Application of this Guideline

This guideline shall apply in the audit of any type of entity.

The auditor shall also consider the documentation requirements of other laws,
regulations and standards.

Prepared by FRC

FRC

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