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Audit Documentation – How long is a piece of string?

July 22nd, 2008 by admin

A question I am often asked is just how much audit documentation is enough.  Obviously each audit engagement is different and a straight answer is never possible, but there are some tips that can help reduce the level of audit documentation without compromising the sufficiency or appropriateness of the audit evidence.

  1. Only conduct audit procedures that are relevant to the audit – According to ASA 220 Objective and General Principles Governing an Audit of a Financial Report there is no obligation to apply Auditing Standards not relevant to the audit.
  2. Leave immaterial balances alone - According to ASA 100 Preamble to AUASB Standards, mandatory paragraphs only apply to classes of transactions, account balances or disclosures that are material.
  3. Do not document what you haven’t done - According to ASA 230 Audit Documentation, it is neither necessary nor practicable to document every matter the auditor considers during the audit.
  4. Do not sign off a procedure just because it is there – Just because a checklist/program contains a procedure does not mean it has to be completed.  Signing off procedure after procedure with a reference of “N/A” is not an effective means of documenting audit evidence.  If a procedure is not applicable, DELETE it.
  5. Divide and conquer - Every audit firm has various types of clients, none of which will fit the “standard” Audit template perfectly.  At a firm level, why not create typical types of audit engagement files once and share these amongst the staff?  Too often staff are individually tailoring files at the engagement level thus multiplying the lost time to the firm
  6. Go paperless - “Pipedream” I hear you say?  Not now!  Many firms are doing it and so can yours.  Save time and money by dumping that paper file and cut out the waste.  With the latest CaseWare features such as linking e-mails from Outlook and the ability to annotate scanned documents and pdfs, there really is no excuse for avoiding electronic files.

Some of the tips may be controversial I know, like deleting procedures, but remember that everything deleted can be brought back again, that is the beauty of electronic workpapers!

The legal bit…

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