Standard on Auditing (SA) 230, ‘Audit Documentation’ prescribes the basic principles of audit documentation. Reporting requirements of Companies Act, 2013 is very much necessary as per the auditing standards.
2. Standard on Auditing (SA) 230, ‘Audit Documentation’ prescribes the basic principles of audit documentation.
Reporting requirements of Companies Act, 2013 is very much necessary as per the auditing standards. To
update the knowledge of professionals, in 2013, ICAI had brought out the publication, “Implementation
Guide to SA 230, Audit Documentation”. The Guide was last revised in 2018 and now in 2022 revised
version is available for the professionals. “Audit Documentation” is defined as: “The record of audit
procedures performed, relevant audit evidence obtained, and conclusions the auditor reached (terms such
as “working papers” or “work papers” are also sometimes used”. Hence, “document”, in the context of
audit refers more to that which is required to be maintained by an auditor to record his findings during the
course of the audit. The audit documentation may be recorded in paper or electronic form. Examples of
documents include work papers, copy or abstract of signed agreements, videos, pictures, spreadsheets,
transcripts, correspondences, data in electronic form containing the records in systematic manner etc.
3. Why Documentation is Important?
Documentation is considered the backbone of an audit. The work that the auditor performs, the
explanations given to the auditor, the conclusions arrived at, all are evidenced by documentation.
Inadequate or improper documentation may be considered as deficiency in performing an audit.
The auditor may have executed appropriate audit procedures, however, if there is no
documentation to prove, it may put question on the work done, in case any material misstatement
is reported. Improper and incomplete documentation may put the auditor in difficult situations,
such as actions from various regulators.
Documentation is essential because:
It supports the auditor’s basis for a conclusion about achieving the auditor’s objectives.
Provides evidence that audit was planned and performed.
It assists supervision and review.
It results in better conceptual clarity, clarity of thought and expression.
It facilitates better understanding and helps avoid misconception.
It supports and evidences compliance with standards on auditing, applicable legal & regulatory
requirements.