By – CA RAJNEESH JAIN

Meaning
 Audit documentation refers to the record of audit
procedures performed , relevant audit evidence
obtained and conclusions the auditors reached.
 It is also termed as Working Papers or Work
Papers.
 Objective of the auditor is to prepare documentation that
provides :
a) A sufficient & appropriate record of the basis for the auditor’s report
b) Evidence that the audit was planned & performed in accordance with
SAs and applicable legal & regulatory requirements.

 Nature of Audit Documentation –

Audit Documentation Provides :
a) Evidence of auditor’s basis for a conclusion about the achievement of
the overall objectives of the auditors;
b) Evidence that the audit was planned & performed in accordance with
SAs & applicable legal & regulatory requirements.
Purpose Of Audit Documentation –

1. Assisting the engagement team to plan & perform the audit.

2. Assisting members of the engagement team to direct & supervision
the audit
work , & to discharge their review responsibilities.
3. Enabling the engagement team to be accountable for its work.
4. Retaining a record of matters of continuing significance to future
audits.
5. Enabling the conduct of quality control reviews & inspections in
accordance with SQC1.
6. Enabling the conduct of external inspections in accordance with
applicable legal , regulatory or other requirements.
 Form , Content & Extent of Audit Documentation
- Depend on factors such as :
1. The size & complexity of the entity
2. The nature of the audit procedure to be performed
3. The identified risks of material misstatement
4. The significance of the audit evidence obtained.
5. The nature & extent of exceptions identified.
6. Audit methodology & tools used.
7. Need to document a conclusion or the basis for a conclusion not
readily determinable from the documentation of the work
performed or audit evidence obtained.

- Auditor shall prepare audit documentation that is sufficient to

enable an experienced auditor , having no previous connection with
the audit, to understand :
• Nature, Timing and Extent of audit procedure performed
• Results of audit procedures performed & audit evidence obtained

- Auditor shall document discussion of significant matters with

management .
Timely Preparation of Audit Documentation :

• Preparing sufficient and appropriate audit documentation on a timely

basis helps to enhance quality of the audit & facilitates the effective
review and evaluation of the audit evidence obtained and conclusion
reached before the auditors report is finalised.

• Documentation prepared after the audit work has been performed is

likely to be less accurate then documentation prepared at the time
such work is performed.
Completion Memorandum or Audit
Documentation Summary :
• Auditor may consider it helpful to prepare & retain as part of the audit
documentation , a summary that describes :
 the significant matters identified during the audit &
 how they were addressed.
to facilitate effective & efficient review & inspection of the audit
documentation , particularly for large & complex audits.

• This summary may assist auditor’s consideration of the significant

matters
Ownership of Audit Documentation :

• Unless otherwise specified by law & regulation , Audit

Documentation is the property of Auditor.

• Auditor may at his discretion , make portions of , or extracts from ,

Audit Documentation available to clients, provided such disclosure
does not undermine the validity of the work performed and
independence of the auditor or of his personnel.
 Audit Evidence may be defined as :

• Information used by the auditor in arriving at the conclusion

on which the auditor’s opinion is based.
• It includes both information contained in the accounting
records underlying the FSs & other information.
Objective of Auditor :
- To design & perform Audit Procedures in such a way as to enable the
auditor to obtain SAAE (sufficient appropriate audit evidence ) to be able to
draw reasonable conclusion on which to base his opinion.

 Information to be used as Audit Evidence :

- When information to be used as audit evidence has been prepared using the
work of management’s expert , the auditor shall , to the extent necessary , having
regard to the significance of that expert’s work for the auditor’s purpose:
a) Evaluate the competence, capabilities & objectivity of that expert
b) Obtain an understanding of the work of that expert
c) Evaluate the appropriateness of that expert’s work as audit evidence for the
relevant assertion.
- When information produced by the entity , auditor shall evaluate whether the
information is sufficiently reliable for his purposes.
 Sufficiency & Appropriateness of Audit Evidence :
• Auditor shall design & perform audit procedure that are appropriate in the
circumstances for the purpose of obtaining SAAE.
• Audit Evidence is necessary to support the Auditor’s opinion & report.
• Entity’s accounting records are an important source of audit evidence.
• Audit evidence comprises both information that support management’s
assertions , and any information that contradicts such assertions.

Sufficiency • Measure of quantity of Audit

Evidence

• Measure of quality of Audit

Appropriateness Evidence
Audit procedures to obtain Audit Evidence:
• Audit evidence to draw reasonable conclusion on which to base the
auditor’s opinion is obtained by performing :
a) Risk assessment procedure and
b) Further Audit Procedures which comprises:
i. Test of controls
ii. Substantive Procedures
 Audit procedures to obtain Audit evidence can include :

1. Inspection
2. Observation
3. External Confirmation
4. Recalculation
5. Reperformance
6. Analytical Procedure
7. Inquiry
 Types of Audit Evidence :

Types of Audit Evidence

Depending upon Depending upon

nature Source

1.Visual 1. Internal
2.Oral 2. External
3.Documentary
Relevance and Reliability of Audit Evidence :
• Relevance : Relevance deals with the logical connection with , or bearing
upon , the purpose of the audit procedure & , where
appropriate , the assertion under consideration. The relevance of information
to be used as audit evidence may be affected by the direction of testing.
• Reliability : Reliability of Information to be used as audit evidence itself,
is influenced by its source & its nature, and the circumstances under
which it is obtained, including the controls over its preparation &
maintenance where relevant .
- Reliability of audit evidence is increased when :
1.It is obtained from independent sources outside the entity.
2.Obtained directly by the auditor.
3.Audit evidences that is generated internally is increased when the related
controls imposed by the entity are effective.
4.Obatined in Documentary form.
5.When provided by original documents is more reliable than audit evidence
provided by photocopies.
 Written Representation :

• SA 580 – “Written Representations” deals with the auditor’s responsibility to

obtain written representation from management and ,where appropriate, those
charged with governance.

• Definition: Written representation may be defined as a written statement by

management provided to the auditor to confirm certain matters or to support other
audit evidence. Written representation in this context do not include financial
statement, the assertions therein, or supporting books and records.
• Written Representation As Audit Evidence :
- Written Representation are necessary information that the auditor requires
in connection with the audit of the entity’s FSs.
- Accordingly, Similar to responses to inquiries, written representations are
audit evidence.
- Although written representation provide necessary audit evidence, they do
not provide SAAE on their own about any of the matters with which they
deal.
- Furthermore, the fact that management has provided reliable written
representation does not affect the nature or extent of other audit evidence
that the auditor obtains about the fulfilment of management’s
responsibilities, or about specific assertions.
• The objectives of the auditor regarding written representation

To obtain written
representations

Objectives of
Auditor regarding To support other evidence
written
Representation

To respond appropriately
• Management from whom Written Representations Requested :

- Auditor shall request written representations from management with

appropriate responsibilities for the FSs & knowledge of the matters
concerned.
- Written Representations are requested from those responsible for the
preparation & presentation of the FSs, Those individuals may vary
depending on the governance structure of the entity, and relevant law or
regulation.
- Written representation may be requested from entity’s CEO,CFO, or other
equivalent persons in entities that do not use such titles . In some cases,
other parties, such as those charged with governance , are also
responsible for the preparation & presentation of FSs.
• Written Representation about
Management’s Responsibilities:
- Auditor shall request management to provide a written representation that it has
fulfilled its responsibility for the preparation of the FSs in accordance with the
applicable financial reporting framework.

- Audit Evidence obtained during the audit that management has fulfilled the
responsibilities is not sufficient without obtaining confirmation from
management about the same