Audit documentation

​​Lima and Limau Associates, a local audit firm is not sure about document audit working papers that are sufficient without carrying excessive information and not scanty. 

​​Auditors record their work in audit working papers. This includes the audit plan, the work allocation to team members and the record of the audit work done by the audit team. The working papers include copies of draft financial statements and the final audited financial statements.

Required:

(i) Explain who between the auditor and the client:

• Has the right to the working papers.
• Custody of the working papers.

(ii) State the expected retention time of the working papers.     

​​Auditors are required to document their understanding of the client’s internal controls. There are various options available for recording the internal control system. Two of these options are narrative notes and internal control questionnaires. 

​​The audit engagement reviewer is required to review the audit documentation (working papers) prepared by the audit team. 

​​International Standard on Auditing (ISA) 230 - Audit documentation, requires the auditor to maintain all information, records and documents gathered during the audit. 

​​Distinguish between a “permanent audit file” and a “current audit file”.

​​ISA 230 (Audit Documentation), requires auditors to prepare audit documentation for an audit of financial statements on a timely basis.

Required:
Describe FOUR benefits of documenting audit work

​​Your firm is in the process of auditing a client dealing in actuarial services. Your audit team lacks sufficient expertise in the field of actuarial services. In this regard, the Audit Manager has recommended engaging a management expert as a source of audit evidence. You are also required to maintain the working papers for the exercise. 

​​International Standards on Auditing (ISA) 230 "Audit Documentation requires that there should be adequate documentation of the work done to support the opinion expressed on the financial statements.

Required:
Discuss four reasons why the auditor should maintain detailed audit working papers.

​​Examine four contents of working papers in circumstances where the auditor has used analytical procedures as substantive tests in carrying out his audit engagement.