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Audit Notes

The document discusses various aspects of audit documentation, including the audit notebook, audit program, audit planning, audit planning memorandum, audit working papers, and audit documentation summary. The audit notebook is used to record unresolved matters identified during an audit that require further explanation. An audit program outlines the audit procedures to be performed, while audit planning involves developing an audit strategy. Audit working papers provide documented evidence of the audit work.

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Madan Aryal
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37 views

Audit Notes

The document discusses various aspects of audit documentation, including the audit notebook, audit program, audit planning, audit planning memorandum, audit working papers, and audit documentation summary. The audit notebook is used to record unresolved matters identified during an audit that require further explanation. An audit program outlines the audit procedures to be performed, while audit planning involves developing an audit strategy. Audit working papers provide documented evidence of the audit work.

Uploaded by

Madan Aryal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Audit Note Book :-

During the course of the audit, the audit staff may identify significant
matters, errors, difficulties, etc. which need to be discussed and sorted out
with the management.
The Notebook that records all those matters which are not solved
immediately and require further explanations is known as audit notebook.

Contents of Audit Note Book :-


● The Details of the auditee and period of audit
● Names of officers and their responsibilities
● Routine queries such as missing invoices, clerical errors, wrong accounting, etc.
● The effect of errors
● Irregularities in financial statements
● Deficiencies in internal control system
● Important matters for future reference

Advantages / Usefulness of Audit Note Book


● Helpful to prepare audit report
● The evaluation of audit staff can be done
● Matters to be discussed are not overlooked or ignored
● Helps to plan recurring audits
● Useful for the auditor to act as a defence if the charges of negligence are brought
against him.

Audit Program

● Audit Program refers to the set of audit procedure that are performed by
audit staff in order to obtain sufficient appropriate evidence, to form an
opinion on the financial statements
● Audit program can be referred as the tools to execute the audit plan
● It includes the compliance and substantive procedures to be performed in
the client entity and also the details of person assigned for respective audit
procedures
● The auditors assign the tasks to the audit staff through audit programs, so
that the work is properly monitored and executed. It can be revised as and
when necessary
● The audit program is included in the auditor's working papers for future
reference also.

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Advantages :-
1. Identification of work
2. Allocation of work
3. Uniformity of work
4. Review of work
5. Guidance to the staff
6. Transfer of assistants
7. Time management
8. Future reference
9. Checklist

Disadvantages :-
1. Formalities to be observed
2. Chance of overlooking
3. Mechanical approach
4. Time consuming
5. Protection of inefficient staffs

Audit Planning :-

❖ Audit Planning refers to the process of identifying the key areas of


concern in the client entity and developing the strategy and detailed
approach for the purpose of conducting and concluding the audit in an
effective manner.
❖ Without proper planning, the auditor cannot determine the nature,
timing and extent of his audit procedures and thus cannot conduct
audit in an efficient manner.
❖ Audit plan is simply the strategy for carrying out the audit of an entity,
which requires the auditor to obtain details of the business of the
client.
❖ Audit plan helps to ascertain the nature, timing and extent of audit
procedures, which is carried out by the engagement team members.

Benefits of Audit Planning :-


1. Helps the auditor to devote appropriate attention to important areas of the
audit
2. Helps the auditor identify and resolve potential problems on a timely basis.
3. Helps the auditor properly organise and manage the audit engagement so
that it is performed in an efficient manner.
4. Assists in the selection of engagement team members with appropriate
levels of capabilities and competence to respond to anticipated risks, and

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the proper assignment of work to them.
5. Facilities the direction and supervision of engagement team members and
the review of their work
6. Assists in coordination of work done by auditors of components and experts.

Audit Planning Memorandum

➢ An audit planning memorandum is a written document prepared by the


senior audit staff, which contains the various information obtained during the
planning process.
➢ It covers the important areas to be considered while conducting the audit.
➢ Audit plan relates to the defined strategy prepared by the auditor for one
specific audit engagement whereas,
➢ Audit planning memorandum is a standing arrangement made by the auditor
for the continuing engagement of a particular client for a period of time.
➢ All the items of the planning memorandum should be considered on every
audit project.

Audit Working Papers

● Audit working papers are the documents which record all audit evidence
obtained during the course of the audit
● The working paper provides documented evidence of an examination and
evaluation and provides a connecting link between the work which is
performed and the final audit report.
● The working papers generally give knowledge about the planning,
procedures performed, evidence obtained and conclusions drawn in the
course of the audit.
● The working papers are standardised, dated and signed.
● The use of standardised working papers (for example, checklists, specimen
letters, and organisation of working papers) may improve the efficiency with
which such working papers are prepared and reviewed.
● Auditor should document the working papers in a proper manner and if the
working papers are in electronic media, he should take proper care for
backup and safety.

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Advantages of Audit Working Paper :-
❖ Necessary for reviewing quality control.
❖ Basis for study patterns and trends
❖ Helps to guide internal audit staff’s professional development
❖ Provides supporting materials
❖ Source of evidence in litigation and lawsuit
❖ Basis for supervisory review
❖ Permanent record for use in planning
❖ Shows that the auditor has conducted the audit as per governing principles.

Audit Documentation

➔ Audit Documentation means the record of the audit procedure performed,


relevant audit evidence obtained and conclusions the auditor reached.
➔ Sometimes also termed as working papers or work papers

Advantages of Audit Documentation :-


➢ To Plan and perform the audit
➢ For supervision to direct and supervise the audit work
➢ Enabling the accounting team to be accountable for its work
➢ Retaining the record of matters
➢ Enabling the conduct of quality control reviews
➢ Enabling the conduct of external inspections

Completion Memorandum/ Audit Documentation


Summary
★ A Summary that describes the significant matters identified during the audit
and how they were addressed, or that includes cross-references to other
relevant supporting audit documentation that provides such information
★ Such a summary may facilitate effective reviews and inspections of the audit
documentation particularly for large and complex audits.

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