FAQs on SA 230 | Audit Documentation (Part-3)
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- 2 Min Read
- By Taxmann
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- Last Updated on 22 March, 2023
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Audit documentation is considered the backbone of an audit. The work that the auditor performs, the explanations given to the auditor and the conclusions arrived at, all are evidenced by documentation. SA 230 deals with the responsibility of the auditor to prepare audit documentation for an audit of financial statements. The objective behind the preparation of the audit documentation that provides
(a) a sufficient and appropriate record of the basis for the auditor’s report
(b) evidence that the audit was planned and performed in accordance with the SAs and applicable legal and regulatory requirements.
To make it easier to understand the stipulations under SA 230, the standard has been broken down into a Q&A format.
FAQ 1. When should an auditor prepare audit documentation?
Timely preparation of sufficient and appropriate audit documentation is important for improving audit quality and facilitating effective review and evaluation of audit evidence. Preparing sufficient and appropriate audit documentation on a timely basis helps to enhance the quality of the audit. Documentation prepared after the audit work may be less accurate than documentation prepared at the time such work is performed and susceptible to risks if the work was performed after the auditor’s report was issued.
FAQ 2. What should be the audit documentation in the case of a smaller/less complex entity?
The extent of audit documentation for smaller/less complex entities may be comparatively lower than for larger entities, and in some cases, the documentation may be limited to a representation letter due to fewer audit procedures and personal communication. Here there may be more personal communication and formally there may only be the representation letter as audit documentation.
When preparing audit documentation, the auditor of a smaller entity may also find it helpful and efficient to record various aspects of the audit together in a single document. Application and Other Explanatory Material given in the standards on auditing also mention the lesser documentation and deals with considerations specific to smaller entities.
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