ISA 230 Documentation

Last updated

ISA 230 Audit Documentation is one of the International Standards on Auditing. It serves to direct the documentation of audit working papers in order to assist the audit planning and performance; the supervision and review of the audit work; and the recording of audit evidence resulting from the audit work in order to support the auditor's opinion.

International Standards on Auditing

International Standards on Auditing (ISA) are professional standards for the performance of financial audit of financial information. These standards are issued by International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB). According to Olung M ISA guides the auditor to add value to the assignment hence building confidence of investors.

Audit working papers are the documents which record all audit evidence obtained during financial statements auditing, internal management auditing, information systems auditing, and investigations. Audit working papers are used to support the audit work done in order to provide the assurance that the audit was performed in accordance with the relevant auditing standards. They show the audit was:

Supervisor manager in a business or event

A supervisor, when the meaning sought is similar to foreman (foreperson), overseer, boss, cell coach, manager, facilitator, monitor, area coordinator, or sometimes gaffer, is the job title of a low level management position that is primarily based on authority over a worker or charge of a workplace. A supervisor can also be one of the most senior in the staff at the place of work, such as a Professor who oversees a PhD dissertation. Supervision, on the other hand, can be performed by people without this formal title, for example by parents. The term supervisor itself can be used to refer to any personnel who have this task as part of their job description.

Contents

ISA 230 statements

The auditor should prepare, on a timely basis, audit documentation that provides:

  1. A sufficient and appropriate record of the basis for the audit report
  2. Evidence that the audit was performed in accordance with ISA's and applicable legal and regulatory requirements (Paragraph 2). [1]

The auditor should prepare the audit documentation so as to enable an experienced auditor, having no previous connection with the audit, to understand:

  1. The nature, timing, and extent of audit procedures performed to comply with ISAs and applicable legal and regulatory requirements;
  2. The results of the audit procedures and the audit evidence obtained;
  3. Significant matters arising during the audit and the conclusions reached thereon. (Paragraph 9) [1]

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 clarify or explain information contained in the audit documentation. (Paragraph 11) [1] This is not true, Oral explanations are only referenced on paragraph 11 of AU section 339 therefore does not refer to ISA.

The audit file must effectively stand on its own. Whilst the auditor may clarify what has been documented the facility to explain detailed aspects of the audit has gone, so this must mean more extensive working papers in some areas.

In documenting the nature, timing and extent of audit procedures performed, the auditor should record the identifying characteristics of the specific items or matters being tested. (Paragraph 12) [1]

In documenting the nature, timing and extent of audit procedures performed, the auditor should record:

  1. Who performed the audit work and the date such work was completed; and
  2. Who reviewed the audit work performed and the date and extent of such review. (Paragraph 23) [1]

The standard also establishes clear responsibilities for the auditor to assemble the final audit file on a timely basis and sets out specific requirements regarding deletions, modifications or additions to audit documentation after the date of the auditor's report.

There are also documentation requirements in the exceptional circumstance when an auditor judges it necessary to depart from a basic principle or essential procedure that is relevant in the circumstances of the audit. The auditor should document how the alternative procedures performed achieve the objective of the audit and, unless otherwise clear, the reasons for the departure.

Methods of recording

Related Research Articles

Financial audit

A financial audit is conducted to provide an opinion whether "financial statements" are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organisation. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.

Auditors report

The auditor's report is a disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit, as an assurance service in order for the user to make decisions based on the results of the audit.

Statement on Auditing Standards No. 99: Consideration of Fraud in a Financial Statement Audit, commonly abbreviated as SAS 99, is an auditing statement issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) in October 2002. The original exposure draft was distributed in February 2002.

Generally Accepted Auditing Standards

Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. In the United States, the standards are promulgated by the Auditing Standards Board, a division of the American Institute of Certified Public Accountants (AICPA).

Continuation of an entity as a going concern is presumed as the basis for financial reporting unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements are prepared under the liquidation basis of accounting.

A working paper or work paper may be:

An engagement letter defines the legal relationship between a professional firm and its client(s). This letter states the terms and conditions of the engagement, principally addressing the scope of the engagement and the terms of compensation for the firm.

A software audit review, or software audit, is a type of software review in which one or more auditors who are not members of the software development organization conduct "An independent examination of a software product, software process, or set of software processes to assess compliance with specifications, standards, contractual agreements, or other criteria".

Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy. The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework such as Generally Accepted Accounting Principles (GAAP).

Single Audit

In the United States, the Single Audit, Subpart F of the OMB Uniform Guidance, is a rigorous, organization-wide audit or examination of an entity that expends $750,000 or more of federal assistance received for its operations. Usually performed annually, the Single Audit's objective is to provide assurance to the US federal government as to the management and use of such funds by recipients such as states, cities, universities, non-profit organizations, and Indian Tribes. The audit is typically performed by an independent certified public accountant (CPA) and encompasses both financial and compliance components. The Single Audits must be submitted to the Federal Audit Clearinghouse along with a data collection form, Form SF-SAC.

ISA 400 Risk Assessments and Internal Control is one of the International Standards on Auditing. It serves to require the auditor to understand the client's accounting system and internal control system and to assess control risk and inherent risk. The objective is to determine the nature, timing and extent of substantive procedures in order to reduce audit risk to an acceptable low level.

Editing ISA 500 Audit Evidence is one of the International Standards on Auditing. It serves to expect the auditor is to obtain audit evidence from an appropriate mix of tests of control systems and substantive tests of transaction and balances.

Audit evidence is evidence obtained by auditors during a financial audit and recorded in the audit working papers.

SOX 404 top–down risk assessment

In financial auditing of public companies in the United States, SOX 404 top–down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002. The term is used by the U.S. Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC). The TDRA is used to determine the scope and required evidence to support management's testing of its internal controls under SOX404. It is also used by the external auditor to issue a formal opinion on the company's internal controls. However, as a result of the passage of Auditing Standard No. 5, which the SEC has since approved, external auditors are no longer required to provide an opinion on management's assessment of its own internal controls.

Negative assurance is a method used by the Certified Public Accountant to assure various parties, such as bankers and stockbrokers, that financial data under review by them is correct. Negative assurance tells the data user that nothing has come to the CPA's attention of an adverse nature or character regarding the financial data reviewed. This type of assurance is normally given to investment bankers and the SEC when the financial data are being used for stock and bond issuance. In addition, this assurance is given whenever a CPA is asked to comment on financial statements upon which a previous Audit Opinion has been rendered.

Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan. Cost Audit ascertain the accuracy of cost accounting records to ensure that they are in conformity with Cost Accounting principles, plans, procedures and objective. Cost Audit comprises following;

  1. Verification of the cost accounting records such as the accuracy of the cost accounts, cost reports, cost statements, cost data and costing technique and
  2. Examination of these records to ensure that they adhere to the cost accounting principles, plans, procedures and objective.

Audit planning is a vital area of the audit primarily conducted at the beginning of audit process to ensure that appropriate attention is devoted to important areas, potential problems are promptly identified, work is completed expeditiously and work is properly coordinated. "Audit planning" means developing a general strategy and a detailed approach for the expected nature, timing and extent of the audit. The auditor plans to perform the audit in an efficient and timely manner.

References

  1. 1 2 3 4 5 ISA 230 (UK)
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.