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1121 Timely preparation of audit documentation

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1121 Timely preparation of audit documentation
Apr-2018

Overview

Preparing audit documentation on a timely basis helps to enhance the quality of the audit and facilitates the effective review and evaluation of the audit evidence obtained and conclusions reached before the assurance engagement report is finalized.

This section outlines the importance of preparing documentation in a timely manner, as well as the need to sign and date working papers and procedures performed.

CPA Canada Copyright

CPA Canada Assurance Standards

Office

Annual Audit

Performance Audit, Special Examination, and Other Assurance Engagements

CAS 230.7 The auditor shall prepare audit documentation on a timely basis. (Ref: Para. A1)

Timely Preparation of Audit Documentation (Ref: Para. 7)

CAS 230.A1 Preparing sufficient and appropriate audit documentation on a timely basis helps to enhance the quality of the audit and facilitates the effective review and evaluation of the 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.

CAS 230.9 In documenting the nature, timing and extent of audit procedures performed, the auditor shall record:

(a) The identifying characteristics of the specific items or matters tested; (Ref: Para. A12)

(b) Who performed the audit work and the date such work was completed; and

Identification of Specific Items or Matters Tested, and of the Preparer and Reviewer (Ref: Para. 9)

CAS 230.A12. Recording the identifying characteristics serves a number of purposes. For example, it enables the engagement team to be accountable for its work and facilitates the investigation of exceptions or inconsistencies. Identifying characteristics will vary with the nature of the audit procedure and the item or matter tested. For example:

For a detailed test of entity-generated purchase orders, the auditor may identify the documents selected for testing by their dates and unique purchase order numbers.
For a procedure requiring selection or review of all items over a specific amount from a given population, the auditor may record the scope of the procedure and identify the population (for example, all journal entries over a specified amount from the journal register).
For a procedure requiring systematic sampling from a population of documents, the auditor may identify the documents selected by recording their source, the starting point and the sampling interval (for example, a systematic sample of shipping reports selected from the shipping log for the period from April 1 to September 30, starting with report number 12345 and selecting every 125th report).
For a procedure requiring inquiries of specific entity personnel, the auditor may record the dates of the inquiries and the names and job designations of the entity personnel.
For an observation procedure, the auditor may record the process or matter being observed, the relevant individuals, their respective responsibilities, and where and when the observation was carried out.

CAS 230.A13. CAS 220 contains requirements and guidance on the review of audit documentation. The requirement to document who reviewed the audit work performed does not imply a need for each specific working paper to include evidence of review. The requirement, however, means documenting what audit work was reviewed, who reviewed such work, and when it was reviewed.

Documentation

CSAE 3001.82 The practitioner shall prepare on a timely basis engagement documentation that provides a record of the basis for the assurance report that is sufficient and appropriate to enable an experienced practitioner, having no previous connection with the engagement, to understand: (Ref: Para. A198-A202)

(a) The nature, timing and extent of the procedures performed to comply with relevant CSAEs and applicable legal and regulatory requirements;

(b) The results of the procedures performed, and the evidence obtained; and

(c) Significant matters arising during the engagement, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions.

CSAE 3001.A201 Documentation may include a record of, for example:

The identifying characteristics of the specific items or matters tested;
Who performed the engagement work and the date such work was completed;
Who reviewed the engagement work performed and the date and extent of such review; and
Discussions of significant matters with the appropriate party(ies) and others, including the nature of the significant matters discussed and when and with whom the discussions took place.

OAG Policy

Auditors shall prepare audit documentation in a timely manner and, as part of this documentation, record who performed the audit work and the date such work was completed. [Nov-2011]

OAG Guidance

The importance of documentation is recognized throughout other Canadian assurance standards. CAS 230—Audit Documentation and Canadian Standard on Assurance Engagements (CSAE) 3001—Direct Engagements have been referred to for the principles and guidance on the timely preparation of documentation for all assurance engagements conducted by the Office. The requirements and application guidance found in CAS may be viewed by clicking the “more” feature displayed in the standards information above.

Timely preparation of documentation

It is usually difficult to reconstruct and recall specific activities related to gathering audit evidence weeks or months after the work was actually performed. Therefore, the Office strives to document its work on a timely basis to

reduce risk of inaccurate audit documentation,
improve audit quality, and
improve engagement efficiency.

Audit teams may add to existing documentation or make changes to improve documentation in order to comply with standards, Office methodology, or policy. In addition, the engagement leader may in his or her judgment require additional documentation or changes to documentation. These additions or changes may be done, provided that the nature and timing of such updates comply with the guidance on documenting audit evidence after the date of the assurance engagement report (OAG Audit 1171 Assembly of the final audit file). However, audit documentation may need to be added to the audit file even after the auditor's report has been tabled or special examination report has been presented to the board of directors (OAG Audit 1172 Modifications to audit documentation after final assembly and OAG Audit 1173 Matters arising after the date of the assurance engagement report).

Document results as you go

Audit teams should document their audit results during the course of the audit and be rigorous in the audit working paper software. They should not wait until a later date to input their results. All audit documents added to the audit file should be linked to the appropriate audit step. For each audit procedure, teams should respond to each element of the audit step when recording their results in the appropriate sections. They should also create hyperlinks to relevant working papers. All audit documentation that supports the audit observations/conclusions (documentation received from the entity or created internally) should be filed in the audit working paper software in the appropriate folder using the appropriate naming convention. The finalized audit file should contain only those documents that an experienced auditor, having no previous connection with the audit, would require in order to understand the audit procedures performed, the audit evidence obtained, and the audit conclusions reached.

Team members may initially store in PROxI documents that they receive from entities. Once an auditor judges that the document should be included in the audit file, he or she copies the document into the appropriate folder or audit step in the audit working paper software. Documents received and/or prepared that will not be used to support the audit should not be stored in the audit file, but may be stored in PROxI. Documentation that is above Protected B status cannot be stored in the audit working paper software, in PROxI, or elsewhere on the OAG network (OAG Audit 1192 Confidentiality, safe custody, integrity, accessibility, and retrievability of engagement documentation and OAG Audit 1111 Nature, purpose, and extent of audit documentation).

Providing evidence of the date and author of audit documentation

The audit working paper software contains the functionality to record who prepared, modified, and signed-off on working papers and also indicates the date that these actions or modifications took place. When other individuals have performed or reviewed some of the audit procedures and evidence of their involvement will not be evident from procedure sign-offs, the names of those individuals need to be documented in the working paper to provide evidence of their involvement. For work documented outside the audit working paper software file, the auditor needs to document who prepared or completed the work and the reviewer needs to document his or her review on the hard copy working paper.

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