Auditing and Assurance Standard Board - Audit Plan - Audit Program - Audit working Papers - Audit Files
- 2. Auditing and assurance standards • Auditing and assurance standards are guidelines that govern how audits and other assurance engagements are conducted. • These standards ensure the quality, consistency, and reliability of financial reporting and other assurance services. • In India, the Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) issues these standards.
- 3. What is AASB (India)? • - AASB is a board formed by ICAI (Institute of Chartered Accountants of India). • - It formulates Engagement and Quality Control Standards. • - Ensures consistency in auditing practices. • - Works under the authority of the Council of ICAI.
- 4. Objectives of AASB (India) • 1. Develop and review auditing standards. • 2. Enhance audit quality and reliability. • 3. Promote transparency and accountability. • 4. Ensure compliance with international standards (IAASB). • 5. Issue guidance notes and practice manuals.
- 5. Scope of AASB (India) • - Covers all types of audits: • • Statutory Audit • • Tax Audit • • Internal Audit • • Forensic Audit • - Applies to audits of: • • Companies • • Firms • • Government bodies • • NGOs
- 6. Functions of AASB (India) • 1. Draft and revise Standards on Auditing (SAs). • 2. Issue implementation guides. • 3. Conduct research and studies. • 4. Coordinate with international standard-setting bodies. • 5. Organize training and seminars for auditors.
- 7. AASB •In India, the Auditing and Assurance Standards Board (AASB) is the primary body responsible for formulating auditing and assurance standards. It functions under the aegis of the Institute of Chartered Accountants of India (ICAI), which is the statutory body established under the Chartered Accountants Act, 1949.
- 8. AASB •Auditing and Assurance Standards Board (AASB) – Overview •Constituted by: The ICAI Council Primary Role: To develop, review, and issue auditing and assurance standards in India, ensuring they are aligned with international best practices while considering Indian conditions.
- 9. AASB •Formulation of Standards: •Develops Standards on Auditing (SAs), Standards on Review Engagements (SREs), Standards on Assurance Engagements (SAEs), and Standards on Related Services (SRSs). •These are largely based on the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB).
- 10. AASB •Guidance Notes and Publications •Issues guidance notes, practice manuals, and implementation guides to help auditors apply the standards effectively. •Harmonization with Global Practices •Ensures Indian auditing standards are in sync with international standards, particularly those of the IFAC and IAASB. •Education and Awareness •Conducts seminars, workshops, and training programs for members and students.
- 11. AASB Consultative Role Works in consultation with regulatory authorities like SEBI, RBI, and CAG to align with their audit expectations and legal frameworks.
- 12. AASB •Important Auditing Standards in India •SA 200 – Overall Objectives of the Independent Auditor •SA 240 – The Auditor’s Responsibilities Relating to Fraud •SA 700 – Forming an Opinion and Reporting on Financial Statements •SA 705 – Modifications to the Opinion in the Independent Auditor’s Report
- 13. AASB • Regulatory Support & Legal Status • The auditing standards issued by ICAI are mandatory for its members (i.e., Chartered Accountants). • These standards are also recognized under the Companies Act, 2013, giving them a legal backing. • The National Financial Reporting Authority (NFRA), established under the Companies Act, also plays a role in oversight, especially for listed and large public interest entities.
- 14. AASB •National Financial Reporting Authority (NFRA) – Regulatory authority overseeing audit quality in listed and large companies. •Quality Review Board (QRB) – Reviews the quality of services rendered by members of ICAI. •Peer Review Board (PRB) – Ensures that practicing units adhere to prescribed auditing standards.
- 15. Process of Standard Formulation • 1. Identify need for a new/revised standard. • 2. Draft prepared by AASB. • 3. Exposure Draft issued for public comments. • 4. Final review and approval by ICAI Council. • 5. Publication and communication to members.
- 16. Need for AASB in India • - Maintains uniformity in audit practices. • - Ensures quality and reliability of audit reports. • - Builds investor and public confidence. • - Helps Indian auditing practices align with global norms. • - Supports auditor education and guidance.
- 17. What is IAASB? • The International Auditing and Assurance Standards Board (IAASB) is an independent standard-setting body that develops auditing, assurance, and related services standards. It operates under the International Federation of Accountants (IFAC). IAASB's standards are adopted by many countries, helping to ensure consistency and quality in global audit practices. Its work aims to enhance the quality and uniformity of auditing and assurance services worldwide.
- 18. IAASB •International Auditing and Assurance Standards are developed by the International Auditing and Assurance Standards Board (IAASB). •These standards guide auditors worldwide on how to perform audits and assurance engagements. •They ensure high-quality, consistent, and transparent audit processes globally.
- 19. Objectives of IAASB • 1. Develop and maintain high-quality international standards on auditing (ISAs), assurance, and related services. • 2. Enhance the credibility and comparability of financial information globally. • 3. Foster global investor confidence in audit reports. • 4. Assist professional accountants in delivering consistent and ethical audit services. • 5. Engage with stakeholders to ensure standards remain relevant and practical.
- 20. Scope of IAASB • The IAASB sets global standards in the following areas: • - International Standards on Auditing (ISAs) • - International Standards on Assurance Engagements (ISAEs) • - International Standards on Review Engagements (ISREs) • - International Standards on Related Services (ISRSs) • - Frameworks for assurance and quality control • These standards apply to auditors, accounting firms, and regulators across the globe.
- 21. IAASB •Works closely with: •IASB (International Accounting Standards Board) – Ensures audit standards align with IFRS. •IESBA (International Ethics Standards Board for Accountants) – Aligns on ethics and independence.
- 22. IAASB A. International Standards on Auditing (ISAs) • Provide a comprehensive framework for external audits of financial statements. • Cover the entire audit process — from planning and risk assessment to evidence gathering and audit reporting. B. International Standards on Assurance Engagements (ISAEs) • Used for assurance engagements outside of audits, such as: • Sustainability reports • Compliance audits • Internal control reviews
- 23. IAASB • C. International Standards on Review Engagements (ISREs) • Guide auditors in performing limited assurance reviews (e.g., interim financial reports). • Often used when a full audit is not required but stakeholders still seek some level of assurance. • D. International Standards on Related Services (ISRSs) • Apply to non-assurance engagements such as: • Agreed-upon procedures (AUP) • Compilation engagements
- 24. IAASB •IAASB standards are used or adapted in over 130 countries. •Adopted by major global audit firms and national standard-setters. •Support cross-border audits, international regulations, and global capital markets.
- 25. Functions and Responsibilities • 1. Conduct research and identify areas requiring new or revised standards. • 2. Collaborate with national standard setters and regulators. • 3. Develop guidance and educational materials to support implementation. • 4. Maintain transparency through exposure drafts and public consultations. • 5. Promote global adoption and consistent implementation of its standards.
- 26. Standard-Setting Process • 1. Research and agenda-setting based on emerging audit issues. • 2. Development of a draft standard by task forces. • 3. Release of Exposure Draft for public comment. • 4. Review and revision based on feedback. • 5. Approval and publication of the final standard. • This process ensures wide participation and credibility of standards.
- 27. 1. Identifying the Need • - IAASB identifies new issues through: • • Global audit trends • • Corporate scandals • • Regulatory feedback • • Technological changes • - Determines whether a new standard or revision is needed.
- 28. 2. Agenda Proposal & Project Approval • - Proposal is developed and submitted for IAASB approval. • - Task Force or Working Group is formed with technical experts. • - The project is added to IAASB’s formal work plan.
- 29. 3. Development of Exposure Draft • - Draft standard is written by the Task Force. • - Includes: • • Objectives and scope • • Auditor responsibilities • • Application and explanatory material.
- 30. 4. Exposure Draft – Public Comment • - Exposure Draft is published on IAASB website. • - Stakeholders (auditors, regulators, academics) are invited to comment. • - Public comment period lasts 90–120 days.
- 31. 5. Evaluation of Comments • - IAASB reviews all public feedback. • - Revisions are made to the draft. • - All comments are documented and transparently disclosed.
- 32. 6. Final Approval and Issuance • - Revised draft is presented for IAASB vote. • - Requires two-thirds majority for approval. • - Standard is officially issued (e.g., ISA, ISAE, ISRE, ISRS).
- 33. 7. Implementation Support • - IAASB provides: • • Implementation guides • • FAQs • • Training programs • - Helps national bodies and auditors apply standards.
- 34. 8. Post-Implementation Review • - IAASB monitors global application. • - Gathers user feedback for future improvements. • - Ensures standards remain relevant and effective.
- 35. Example – ISA 315 (Revised) • - Revised to improve risk identification practices. • - Underwent public consultation, redrafting, and final vote. • - Now globally followed for assessing risk of material misstatements.
- 36. Importance of IAASB • - Promotes global consistency and comparability in audit and assurance practices. • - Builds investor and stakeholder trust in financial reporting. • - Facilitates international trade and capital flows. • - Supports regulators and standard-setters in implementing global best practices. • - Enhances the accountability and transparency of auditors worldwide.
- 37. IAASB •ISAs = International Standards on Auditing •Provide detailed guidance on: 1. Planning audits 2. Performing procedures 3. Gathering evidence 4. Reporting findings •Assurance standards cover engagements like reviews, risk assessments, and agreed-upon procedures.
- 38. •Enhance audit quality globally •Provide a clear and consistent approach to performing audits and assurance services. •Promote uniformity and comparability •Reduce variations in audit practices across jurisdictions by encouraging adoption of a single set of global standards.
- 39. •Protect the public interest •Ensure that standards respond to the needs of users of financial statements, such as investors, regulators, and governments. •Respond to emerging challenges •Address new areas like: •ESG and sustainability reporting •Use of artificial intelligence and data analytics in audits •Cybersecurity and fraud risk
- 40. • Global Adoption and Influence • IAASB standards are adopted or adapted in over 130 countries. • Used by international auditing firms (e.g., PwC, Deloitte, EY, KPMG) and local firms. • Supported by global organizations such as: • World Bank • International Organization of Securities Commissions (IOSCO) • International Forum of Independent Audit Regulators (IFIAR)
- 41. Body Purpose of Collaboration IASB (International Accounting Standards Board) To align audit standards with IFRS reporting frameworks. IESBA (International Ethics Standards Board for Accountants) To ensure ethical behavior and independence of auditors. National Standard Setters To encourage consistent implementation and feedback. Regulators (e.g., PCAOB, FRC, ESMA) To ensure IAASB standards support effective regulatory oversight.
- 42. IAASB • Establishing High-Quality Financial Reporting Standards • IASB sets IFRS, which provide the framework and principles for consistent, transparent, and comparable financial statements. • Auditors use these standards as the basis for evaluating whether financial statements are prepared fairly.
- 43. IAASB • Impact and Benefits of IAASB’s Work • Builds stakeholder confidence in financial information. • Supports global economic stability by enhancing the quality of corporate reporting. • Helps companies access international markets by complying with globally recognized audit standards. • Assists regulators and enforcement bodies in maintaining market discipline.
- 44. Audit Planning: •Auditing and assurance standards are guidelines that govern how audits and other assurance engagements are conducted. •These standards ensure the quality, consistency, and reliability of financial reporting and other assurance services. •In India, the Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI)
- 45. Audit Planning: •For effective and efficient conduct of an audit; audit planning is necessary. In fact, planning should be continuous throughout the course of audit assignment. •Meaning: Generally, planning is deciding in advance what is to be done in the future. It is the process of thinking before doing.
- 46. Audit Planning: • Definition: Statement of Standard Auditing Practices (SAP) – I renamed as Auditing and Assurance Standards (AAS-I) States that, “The auditor should plan his work to enable him to conduct an effective audit in an efficient and timely manner”.
- 47. Audit Planning: • Goals of Audit Planning: • a) Developing time budgets, • b) Assigning audit staff personnel, • c) Scheduling dates for interim and year end audit procedures.
- 48. Audit Planning: • 1) Knowledge of accounting system in the organization and its policies and internal control procedures. • 2) Reliability of the internal control system. • 3) Programming of the nature, timing and extent of the audit procedures to be performed. • 4) Good co-ordination of audit work.
- 49. Developing an Audit Plan: •1. The Statutory responsibilities under the assignment. •2. The term of engagement. •3. The applicable legal rules. •4. The nature and timings of reports. •5. The prevailing accounting policies in the organization and changes if any.
- 50. Developing an Audit Plan: • 6. The significant auditing areas. • 7. The effect of any new accounting or audit pronouncements of the audit under consideration. • 8. Possible rotation of emphasis over a period on specific audit areas. • 9. Reliability of accounting and control systems. • 10. The areas requiring special attention like chances of errors and frauds
- 51. Developing an Audit Plan: 11.The nature and extent of audit evidence to be obtained. 12.The work of internal auditors in the audit of branches or subsidiaries. 13.The involvement of experts, other auditors like branch auditors. 14. The allocation of work between joint auditors and procedures for its control and review. 15.Establishing and co-ordinating staffing requirements.
- 52. Advantages •1. It assists the auditor identify and devote proper attention to important areas of the audit. •2. Assist the auditors identify and also resolve relevant problems on a timely and daily basis. •3.It also assists the auditor manage and organize the engagement so that is carried out effectively
- 53. Advantages •4. Assist in choosing engagement team partners with the right capability and competency to respond to any anticipated risks and also in allocating responsibilities to team member. •5.Encourages the supervision of different engagement team partners and also helps in reviewing of their work. •6. Helps in proper coordination of all work carried out by specialists.
- 54. Disadvantages • 1.Rigidity An audit plan is stick to set patterns and standard approach. This might check initiative and flexibility, therefore disrupting professional judgment of the people involved. • 2.Overlooking the capabilities of audit staffs An audit plan will make the whole audit process automated thus loosening the sense of duties and responsibility for audit staff. It could decrease inventiveness and initiative, with fee application of audit staff abilities and talents
- 55. Audit Programme • An audit programme serves as a foundational blueprint for the audit team, outlining key details about the organization under review, including its scale and operational scope. • It guides how the audit should be executed, specifies the distribution of responsibilities among team members, and estimates the timeframe required to complete the audit process efficiently.
- 56. Audit Programme • An audit programme serves as a foundational blueprint for the audit team, outlining key details about the organization under review, including its scale and operational scope. • It guides how the audit should be executed, specifies the distribution of responsibilities among team members, and estimates the time frame required to complete the audit process efficiently.
- 57. Audit Programme 1.What are the audit goals? 2.Where will it take place? 3.When will it happen? 4.How will it be done?
- 58. Audit Programme
- 59. Audit Programme - Functions •Connects the stages of planning with actual implementation •Establishes a structure for oversight and responsibility •Supports the mentoring and skill development of less experienced team members •Enables effective management and organizational control
- 60. Audit Programme - Advantages • Provides clear instructions for audit processes • Includes a checklist to ensure thoroughness • Enables division of work among team members • Facilitates supervision during the audit • Assigns and fixes responsibilities clearly • Serves as evidence of audit activities • Assists in future audit planning • Promotes an efficient audit process
- 61. Audit Programme - Disadvantages 1.Inflexible 2.Repetitive tasks 3.No creativity 4.False confidence 5.Not always fit
- 62. Audit vs Accounting • Accounting is ongoing; auditing happens once yearly after accounts close. • Accountants need no specific qualification; auditors must be Chartered Accountants. • Accountants work for the company; auditors are independent. • Accountants earn a salary; auditors get paid fees. • Accounting records transactions; auditing verifies these records. • Accounting comes before auditing.
- 63. . Basis Audit Plan Audit Program Meaning A general strategy outlining the scope, timing, and direction of the audit. A detailed list of procedures to be performed during the audit. Focus Strategic – focuses on what, when, and how the audit will be conducted. Operational – focuses on how individual audit steps will be executed. Purpose To guide overall audit direction and ensure efficient and effective audit. To ensure all audit tasks are completed systematically and thoroughly. Level of Detail High-level overview. Contains detailed steps and specific
- 64. . Basis Audit Plan Audit Program Prepared By Usually by the engagement partner or senior auditor. Prepared by audit staff under supervision. Flexibility Broad and adaptable during the audit. More specific, but may be modified as needed during execution. Documentatio n Example May include timelines, risk areas, materiality levels, resource allocation. Includes specific procedures like “Verify bank reconciliation,” “Check invoices.” Standard Reference Governed by SA 300 (Planning an Audit of Financial Statements). Governed indirectly through SA 300 and SA 330 (Audit Procedures).
- 65. 1. Company Background (Example) • - ABC Traders Pvt. Ltd. • - Mid-sized trading company dealing in FMCG goods. • - Operations in 3 states, 50 employees. • - Annual turnover: ₹30 crore.
- 66. 2. Audit Plan – Objectives • - Assess internal control systems. • - Verify revenue recognition and inventory valuation. • - Check compliance with tax and company law provisions. • - Identify risk areas and material misstatements.
- 67. 3. Audit Plan – Scope & Materiality • - Financial year: 1 April 2024 – 31 March 2025 • - Materiality threshold: ₹1,00,000 • - Areas of focus: • • Inventory • • Sales & Receivables • • Purchases & Payables • • Statutory dues
- 68. 4. Audit Plan – Team and Timing • - Team: • • Audit Manager • • 2 Audit Assistants • - Timing: • • Interim Audit: Jan 2025 • • Final Audit: April 2025 • - Reporting: Draft report by 15 May 2025
- 69. 5. Sample Audit Program – Inventory • - Review stock records and physical stock. • - Test valuation method (FIFO/WAC). • - Verify slow-moving/obsolete inventory. • - Match purchases to goods inward register. • - Confirm inventory insurance coverage.
- 70. 6. Sample Audit Program – Sales & Receivables • - Verify sales invoices and delivery challans. • - Check cut-off procedures for March transactions. • - Test customer balances through direct confirmations. • - Analyze aging of receivables and provision for doubtful debts.
- 71. 7. Sample Audit Program – Purchases & Payables • - Match purchase orders, goods received notes, and vendor invoices. • - Check authorization of expenses. • - Verify payments made to suppliers. • - Confirm major creditors.
- 72. 8. Sample Audit Program – Statutory Compliance • - Verify GST returns and reconciliations. • - Check TDS deduction and deposit. • - Ensure timely filing of ROC forms. • - Review board meeting minutes for financial decisions.
- 73. Quality Control Audit •A quality control audit is a systematic examination and evaluation of processes, procedures, and activities to ensure compliance with established quality standards and requirements.
- 74. What is Quality Control in Audit? • Quality control in audit refers to the system of policies and procedures implemented by an audit firm or auditor to ensure that audits are conducted in compliance with professional standards, regulatory requirements, and ethical principles. It ensures that audit opinions are reliable and audit documentation is thorough and complete.
- 75. Objectives of Quality Control • 1. Ensure audit work is performed consistently and ethically. • 2. Maintain compliance with applicable standards (e.g., SAs, SQC 1). • 3. Enhance the credibility of financial reporting. • 4. Minimize risk of audit failures and errors. • 5. Protect public interest by ensuring trustworthy audit opinions.
- 76. Elements of a Quality Control System (as per SQC 1) • 1. Leadership responsibilities for quality. • 2. Ethical requirements (Independence, Integrity, Confidentiality). • 3. Acceptance and continuance of client relationships. • 4. Human resources (Training, competency of audit staff). • 5. Engagement performance (Supervision, documentation, review). • 6. Monitoring of quality control policies and procedures.
- 77. Role of Auditor and Audit Firm • - Audit firm must establish firm-wide quality control policies. • - Auditor must ensure that the audit engagement complies with professional standards. • - Engagement partner is responsible for the overall quality on the audit engagement. • - Documentation must reflect planning, execution, review, and conclusions drawn.
- 78. Role of the Auditor • 1. Examine financial records and assess compliance with accounting standards. • 2. Evaluate internal controls and risk management practices. • 3. Detect material misstatements due to error or fraud. • 4. Form an audit opinion and issue an audit report. • 5. Maintain independence and integrity throughout the audit process.
- 79. Role of the Audit Firm • 1. Develop and implement quality control policies (as per SQC 1). • 2. Assign competent staff to audit engagements. • 3. Provide training and professional development. • 4. Monitor engagement performance and review audit documentation. • 5. Ensure compliance with ethical and regulatory requirements.
- 80. Engagement Partner Responsibilities • 1. Overall responsibility for audit quality. • 2. Ensure audit is planned and performed according to standards. • 3. Supervise team members and review critical areas. • 4. Communicate with management and those charged with governance. • 5. Sign and take ownership of the audit report.
- 81. Example – Responsibility Sharing • Example: • An audit firm 'KLM & Associates' assigns an audit of XYZ Ltd. to its senior partner. • - The engagement partner ensures proper planning and staff assignment. • - The team carries out audit procedures, evaluates controls, and tests transactions. • - A second partner conducts a quality review before signing. • This shows how the firm and individual auditors collaborate for audit quality.
- 82. ISA 220 & SQC 1 – Key Quality Standards • - ISA 220: Deals with quality control at the audit engagement level. • - SQC 1 (India): Prescribes quality control for firms performing audits and reviews. • - Emphasizes partner involvement, ethical compliance, and continuous monitoring. • - Ensures that quality is integrated into every phase of the audit process.
- 83. Quality Control Procedures During Audit • 1. Planning and supervision of audit. • 2. Assignment of tasks based on staff competence. • 3. Review of audit work at all stages. • 4. Communication with management and those charged with governance. • 5. Final quality review by engagement partner. • 6. Monitoring feedback and making improvements.
- 84. Importance of Audit Quality Control • - Builds trust in the financial statements. • - Enhances reputation and credibility of the audit firm. • - Reduces risk of litigation or regulatory action. • - Encourages a culture of accountability and professionalism. • - Ensures alignment with global and national audit regulations.
- 85. Example of Quality Control in Audit • Example: An audit firm XYZ & Co. has a policy that every audit file must undergo a second partner review before issuing the audit report. • During the audit of ABC Ltd., the engagement partner completed the audit, and the quality review partner noticed: • - A key control test on revenue recognition was missing. • - Documentation lacked clarity on client acceptance procedures. • As a result of this quality control review: • - Additional audit procedures were performed. • - Proper documentation was added. • - A modified opinion was considered but ultimately deemed unnecessary after further evidence was gathered • This example shows how quality control detects issues before finalizing the audit, ensuring standards are met and audit risk is minimized.
- 86. What are Auditing Working Papers? •Auditing working papers are the written documents prepared and maintained by auditors that record evidence obtained, procedures performed, conclusions reached, and support for the audit opinion. They form the backbone of audit documentation.
- 87. Objectives of Working Papers • 1. Serve as evidence of the audit work performed. • 2. Support the auditor’s conclusions and audit opinion. • 3. Aid in planning and supervision of the audit. • 4. Assist in quality control and peer reviews. • 5. Provide documentation in case of litigation or regulatory review.
- 88. Types of Working Papers • 1. Permanent File – Contains information of ongoing relevance: • - Articles of association, MOA • - Loan agreements • - Organizational charts • - Past years’ audit reports • 2. Current File– Specific to current year audit: • - Trial balance • - Audit programs • - Confirmation letters • - Working trial balances • - Notes and queries
- 89. Contents of a Working Paper • - Title and date • - Purpose of the document • - Source of the data (client or external) • - Detailed observations and conclusions • - Signature of the auditor who prepared and reviewed it • - Cross-references to other audit papers
- 90. Example Audit File - Permanent File • Client: ABC Ltd. • Type: Permanent File • Contents: • - Certificate of Incorporation • - MOA and AOA • - Tax Registration Certificates • - Organization Chart • - Copies of Lease Agreements • - List of Board Members
- 91. Example Audit File - Current File •Client: ABC Ltd. •Type: Current Year File •Contents: •- Trial Balance as on 31st March 2025 •- Bank Confirmation Letter •- Debtor and Creditor Confirmations •- Inventory Valuation Statement •- Notes on Revenue Recognition Testing •- Audit Program Checklist
- 92. Best Practices for Working Papers • - Ensure clarity and legibility. • - Cross-reference between documents. • - Maintain confidentiality and secure storage. • - Review and approve by engagement partner. • - Follow guidance from SA 230 (Audit Documentation).
- 93. Comparison – Permanent Audit file and Current Audit file • 📌 Meaning • - Permanent Audit File: Contains information relevant for multiple audit periods. • - Current Audit File: Contains data related only to the current year’s audit. • 📌 Purpose • - Permanent: Supports background understanding and recurring audit work. • - Current: Documents audit procedures and evidence for the current period. • 📌 Frequency of Update • - Permanent: Updated when client data changes. • - Current: Updated annually with each audit engagement.
- 94. Comparison – Permanent Audit file and Current Audit file • 📌 Examples of Contents • - Permanent: MOA, AOA, legal agreements, past audit reports, organizational chart. • - Current: Trial balance, confirmation letters, audit checklists, inventory records. • 📌 Usefulness • - Permanent: Helps understand long-term context of the entity. • - Current: Focused on evaluating current year’s financials. • 📌 Standards Referenced • - Both files are documented under SA 230 (Audit Documentation).
- 95. Rights of the Auditor • - Full control and custody of the working papers. • - Right to deny client access unless legally required. • - Right to use papers for future audits (with confidentiality preserved). • - Right to retain documentation for required period (typically 7–10 years).
- 96. Responsibilities of the Auditor • - Maintain confidentiality as per ethical code. • - Prevent unauthorized access to audit files. • - Store documentation securely (physical or digital). • - Ensure clarity, completeness, and accuracy of records. • - Follow SA 230 and firm’s internal documentation policies.
- 97. Confidentiality and Disclosure • - Working papers must not be shared without: • • Client consent, or • • Legal/regulatory compulsion (e.g., court orders). • - Must avoid discussing client data publicly or informally.
- 98. Custodial Duties in Practice – Example • Example: • An audit firm keeps its audit files on encrypted cloud servers. • - Access is limited to authorized team members. • - Client requests a copy, but is denied unless legally mandated. • 👉 Demonstrates proper custody and legal ownership by the auditor.
- 99. Consequences of Misuse or Negligence • - Penalties under ICAI guidelines and Companies Act for: • • Misuse or destruction of audit records. • • Breach of confidentiality. • • Poor maintenance or falsification of documentation.
- 100. Quality Control in Audit Work • - Governed by SQC 1 (India) / ISQC 1 (International). • - Ensures consistent, ethical, and standard-compliant audit execution. • - Includes leadership responsibility, ethical compliance, performance monitoring, and file review.
- 101. How Working Papers Support Quality Control • - Provide evidence that proper audit procedures were followed. • - Allow review by senior team members and partners. • - Serve as basis for internal inspections and peer reviews. • - Help detect and correct deficiencies in audit engagement.
- 102. Role of Audit Files in Quality Control • - Ensure organized storage and easy retrieval for supervision. • - Enable cross-referencing, version tracking, and timely review. • - Support file review procedures during post-audit quality inspections.
- 103. What is Audit Documentation? • Audit documentation (working papers) includes records of procedures performed, evidence obtained, and conclusions drawn by the auditor. • It supports the audit opinion and is critical for accountability and compliance.
- 104. Objectives of Audit Documentation • - Provide evidence of audit planning, procedures, and conclusions. • - Assist in supervision and review. • - Support audit opinion. • - Enable quality control and peer review. • - Serve as legal evidence in case of disputes.
- 105. Importance in the Audit Process • - Ensures consistency and completeness of audit procedures. • - Helps in review by engagement partners and regulators. • - Aids future audits through reference to past work. • - Protects auditors in legal proceedings.
- 106. Legal Aspects of Audit Documentation • - Must comply with national regulations (e.g., Companies Act, ICAI guidelines). • - Documentation should be sufficient and appropriate to support the audit opinion. • - Must be retained for a specific period (e.g., 7–10 years as per SA 230). • - Subject to inspection by regulators, courts, or peer reviewers. • - Cannot be destroyed before the retention period ends.
- 107. Custody and Safekeeping Requirements • - Audit firm must ensure secure custody of audit documentation. • - Access should be restricted to authorized personnel. • - Physical and digital safeguards must be in place to prevent unauthorized access or loss. • - Cloud storage must meet data protection and privacy laws.
- 108. Ethical Aspects of Audit Documentation • - Maintain confidentiality of client information (Code of Ethics – ICAI). • - Do not manipulate, falsify, or delete records post-audit. • - Disclose documents only with client consent or legal obligation. • - Ensure professional behavior, objectivity, and integrity in all documentation.
- 109. Confidentiality and Client Rights • - Audit documentation is the property of the auditor, but confidentiality must be maintained. • - Clients may not demand copies unless law mandates. • - Disclosure must follow legal routes (e.g., court orders, regulatory reviews).
- 110. Penalties for Misconduct • - ICAI and legal frameworks impose penalties for: • • Destruction or tampering of records • • Breach of confidentiality • • Negligence in record-keeping • • Non-compliance with audit standards