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Questions and Answers
Which of the following is NOT a component of audit documentation?
What is the primary purpose of audit documentation?
How does audit documentation assist the engagement team?
What does SA 230 specifically address regarding audit documentation?
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What is the significance of retaining a record of matters of continuing significance to future audits?
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Which aspect does NOT relate to evidence provided by audit documentation?
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What is one of the objectives of the auditor concerning audit documentation?
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In what scenario might additional documentation requirements be established?
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Which of the following items is NOT included in audit documentation?
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What is a key benefit of preparing audit documentation on a timely basis?
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What definition best describes the Audit File?
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Which of the following is considered part of audit documentation?
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Which of the following statements accurately describes the importance of audit documentation?
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What must be included in audit documentation to ensure its sufficiency and appropriateness?
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Which of these documents should NOT be included in the audit file?
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How does audit documentation facilitate the audit process?
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Who owns the audit documentation according to Standard on Quality Control (SQC) 1?
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What is required concerning the disclosure of audit documentation to clients?
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What should the auditor consider if there is an individual relevant SA objective that cannot be achieved?
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In the case study involving CA Sonali Morarka, what was a significant issue concerning her audit documentation?
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Which of the following is an accurate statement about audit documentation?
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What was the consequence of CA Sonali Morarka's actions after receiving a letter from the regulator?
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What aspect of audit documentation is highlighted by the director's assertion that it belongs to the company?
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What documentation should the auditor include in their working papers regarding discussions with company management?
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Study Notes
Audit Documentation and Ethics
- SA 230 outlines auditor's responsibility in preparing audit documentation for financial statement audits.
- The specific documentation requirements of other SA standards do not limit the application of SA 230.
- Laws or regulations may require additional documentation.
- The objective of audit documentation is to provide a sufficient and appropriate record of the basis for the auditor's report and evidence that the audit was planned and performed in accordance with applicable standards and regulations.
- Audit documentation provides evidence of the auditor's basis for conclusions about the achievement of the overall objectives of the audit and evidence that the audit was planned and performed in accordance with SA standards and applicable legal and regulatory requirements.
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Purposes of audit documentation:
- Assisting the engagement team in planning and performing the audit.
- Assisting engagement team members in directing and supervising audit work and discharging their review responsibilities.
- Enabling the engagement team to be accountable for their work.
- Retaining a record of matters of continuing significance to future audits.
- Enabling quality control reviews and inspections in accordance with SQC 1.
- Enabling external inspections in accordance with legal, regulatory, or other requirements.
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Examples of audit documentation:
- Summaries of significant matters.
- Letters of confirmation and representation.
- Checklists.
- Correspondence (including emails) concerning significant matters.
- The auditor may include copies of the entity's records, such as significant and specific contracts and agreements.
- Audit documentation is not a substitute for the entity's accounting records.
- Superseded drafts of working papers, financial statements, notes reflecting incomplete or preliminary thinking, previous copies of documents corrected for typographical or other errors, and duplicates of documents are not required to be included in audit documentation.
- Auditors should prepare audit documentation on a timely basis.
- Preparing sufficient and appropriate audit documentation on a timely basis helps enhance the quality of the audit and facilitates the effective review and evaluation of audit evidence obtained and conclusions reached before the auditor's report is finalized.
- Documentation prepared after the audit work has been performed is likely to be less accurate than documentation prepared at the time such work is performed.
- Audit file refers to one or more folders or other storage media, in physical or electronic form, containing the records that comprise the audit documentation for a specific engagement.
- According to SQC 1, unless otherwise specified by law or regulation, audit documentation is the property of the auditor.
- The auditor can make portions of, or extracts from, audit documentation available to clients at their discretion, provided such disclosure does not undermine the validity of the work performed or, in the case of assurance engagements, the independence of the auditor or their personnel.
Case Study
- CA Rajan Pillai heads the engagement team conducting the audit of a company.
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Description
This quiz covers the key principles of SA 230 on audit documentation, detailing the auditor's responsibilities in preparing necessary documents for financial statement audits. It emphasizes the importance of compliance with applicable standards and legal requirements, as well as the purposes of audit documentation in the audit process.
