Case eleven. 1: The Runners Shop
• AU 339 (SAS 103): Taxation Documentation
• Auditing Normal No . several: Audit Paperwork
• Foreign Standard in Auditing 230' (Revised) (Site -http://irba.co.za/documents/doc_00535.pdf )
1] Explain the functions of audit documentation and explain how come each purpose is important.
According to AU 339. 03, " audit documents provides the main support to get the”: (a) " manifestation in the auditor's report that the auditor performed the review in accordance with GAAS”, and (b) " judgment expressed regarding the financial details or the declaration to the result that an opinion cannot be expressed”. AU 339. 04 goes on to state that this " taxation documentation can be an essential element of audit quality” and AU 339. 05 further declares that " audit records is the record of audit procedures performed, relevant taxation evidence acquired, and results the auditor reached”. As a result individuals can review the audit documents to see the audit was performed relative to GAAS, they can identify the reason why for the auditor's view, and they can evaluate the top quality of the review.
Paragraph almost 8 of AU 339 offers a list of further purposes of audit paperwork:
• The audit team uses audit documents to help prepare and perform the examine. It is necessary to program the audit so that the audit team knows the work that needs completed and in addition they have a better idea of the length of time the engagement will last. The audit group will use the audit documentation when determining the level of risk they will agree to and any high risk areas that need nearer examination. The utilization of audit documentation to perform the audit is important so that the examine team have an accurate photo of the company's financial info.
• Auditors who are a new comer to the engagement can review audit paperwork from the previous year to obtain a better comprehension of the work performed. Last year's audit documents can be reviewed to establish required audit types of procedures and to identify any areas that might be a continued concern.
• Audit team members in a supervisory role can use audit documents to help direct and watch over the examine work. They will also use audit documentation to review the quality of the work performed. The audit affiliates who are supervising the audit procedures can effectively perform their very own review in the event adequate paperwork is available. This kind of eliminates the need for oral communications that can be long and erroneous.
• Audit documents includes the " methods performed, the audit facts examined, plus the conclusions reached” by the taxation team. This kind of " demonstrates the liability of the taxation team due to its work”. With adequate examine documentation it is clear what steps the audit team took when performing the review, providing assurance that the work was performed as mentioned. These steps could be traced to demonstrate that the correct conclusions had been reached.
• Examine documentation is employed in future audits of the firm, recording virtually any significant problems that would affect the audit judgment. It is possible that current high risk factors can cause a problem over and above the current season audit. Next year's taxation team can review this kind of year's review documentation to distinguish these high-risk factors that may affect the current year's audit opinion.
• Taxation documentation can be used by top quality control critics to help " understand how the engagement staff reached significant conclusions and whether there is adequate evidential support for all those conclusions”. It is crucial to understand this kind of because business/accounting procedures may need to be superior to correct virtually any misstatements. To be able to identify the support for people conclusions is essential so that the organization does not produce any needless changes.
• Audit documentation is used by auditors to conduct examinations or peer...