Piotr Pyziak, Consultant, CFRR

Transcription

1 Piotr Pyziak, Consultant, CFRR 15 March 2017, Vienna Audit Training of Trainers Road to Europe: Program of Accounting Reform and Institutional Strengthening EU-REPARIS is funded by the European Union and is a part of WB EDIF.

2 »Requirements of ISA 230 Audit Documentation :» objectives of audit documentation,» the form, content and examples of working papers and audit documentation.»isa 500 Audit Evidence :» the need to obtain sufficient (quantity) and appropriate (quality, relevance and reliability) audit evidence,» the hierarchy of audit evidence, types, and examples of when various techniques are appropriate,» engagement in relevant assignments and practical cases. 2

3 »ISA 230 describes auditor s responsibility to prepare audit documentation for an audit of financial statements.»audit documentation specific ISA requirements:» provides evidence of the basis for a conclusion about the achievement of the overall objectives of the auditor;» provides evidence that the audit was planned and performed in accordance with ISAs and applicable legal and regulatory requirements. 3

4 »Additional purposes of audit documentation (ISA 230):» Assisting the engagement team to plan and perform the audit.» Assisting members of the engagement team responsible for supervision to direct and supervise the audit work, and to discharge their review responsibilities in accordance with ISA 220.2» Enabling the engagement team to be accountable for its work. 4

5 »Additional purposes of audit documentation (ISA 230):» Retaining a record of matters of continuing significance to future audits.» Enabling the conduct of quality control reviews and inspections in accordance with ISQC 1 or national requirements that are at least as demanding.» Enabling the conduct of external inspections in accordance with applicable legal, regulatory or other requirements. 5

6 »Audit documentation The record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached (terms such as working papers or workpapers are also sometimes used).»audit file One or more folders or other storage media, in physical or electronic form, containing the records that comprise the audit documentation for a specific engagement. 6

7 »Audit documentation to be sufficient to enable an experienced auditor, with no previous connection with the audit, to understand:» The nature, timing and extent of the audit procedures performed to comply with the ISAs and applicable legal and regulatory requirements;» The results of the audit procedures performed, and the audit evidence obtained; and» Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions. 7

8 » The auditor shall record:» Characteristics of the specific items or matters tested;» Who performed the audit work;» The date audit work was completed;» Who reviewed the audit work, the date and extent of such review;» Significant matters and related significant professional judgments;» Engagement team to be accountable, who facilitates the investigation of exceptions or inconsistencies; 8

9 »Documenting on audit working papers:» detailed test» review of all items over a specific amount from a given population» procedure requiring systematic sampling from a population of documents» procedure requiring inquiries of specific personnel» observation procedure 9

10 »Other appropriate records (not prepared by auditor), e.g. minutes of meetings (board, supervisory board, audit committee) prepared by the entity s personnel and agreed by the auditor.»others with whom the auditor may discuss significant matters may include: other personnel within the entity (investment officers, sales executives, R&D officers) and external parties (persons providing professional advice to the entity, e.g. lawyers, external treasurers, bankers, advertising companies, etc). 10

11 »Factors affecting audit documentation:» The size and complexity of the entity.» The nature of the audit procedures performed.» The risks of material misstatement.» The significance of the audit evidence obtained.» The exceptions identified.» The need to document a conclusion or the basis for a conclusion which is not readily determinable from the documentation of the work performed or audit evidence obtained.» The audit methodology and audit tools used. 11

12 »Audit documentation: recorded on paper, on electronic or other media.»abstracts or copies of the entity s records (e.g. contracts or agreements) as part of audit documentation.»audit documentation, however, is not a substitute for the entity s accounting records. 12

13 »Examples of audit documentation:» Audit programs.» Analyses.» Issues memoranda.» Summaries of significant matters.» Letters of confirmation and representation.» Checklists.» Correspondence (including ) concerning significant matters.» Table with proposed audit adjustments 13

14 »To assemble the audit documentation in an audit file, complete the administrative process of assembling the final audit file - on a timely basis after the date of the auditor s report.»after making the final audit file - do not delete or discard audit documentation of any nature before the end of its retention period.»if to modify existing audit documentation or add new documentation - auditor shall document:» The specific reasons for making them;» When and by whom they were made and reviewed. 14

15 Audit evidence to draw reasonable conclusions on which to base the auditor s opinion is obtained by performing (ISA 315 & 330): (a) Risk assessment procedures; and (b) Further audit procedures, which comprise:»(i) Tests of controls, when required by the ISAs or when the auditor has chosen to do so; and»(ii) Substantive procedures, including tests of details and substantive analytical procedures. 15

16 AUDIT EVIDENCE Audit procedures Previous audits Firm s quality control for client acceptance and continuance Inquiry Inspection Observation Confirmation Recalculation Auditor s opinion Accounting records Management s expert Reperformance Analitycal procedures 16

17 »Inquiry - seeking information of knowledgeable persons, both financial and non-financial, within the entity or outside the entity.»inspection - examining records or documents, whether internal or external, in paper form, electronic form, or other media, or a physical examination of an asset. 17

18 »Observation - looking at a process or procedure being performed by others.»external Confirmation - obtained as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic or other medium. 18

19 »Recalculation - checking the mathematical accuracy of documents or records, may be performed manually or electronically.»reperformance - involves the auditor s independent execution of procedures or controls that were originally performed as part of the entity s internal control. 19

20 »Analytical Procedures - evaluations of financial information through analysis of plausible relationships among both financial and non-financial data. 20

21 »Audit client: entity organising conferences Conference Ltd. Sales Sales HOTELS Conference Ltd Clients Invoice for renting conference space Add profit margin: costs plus mark up of 15% Invoice for organising the conference»audit finding: profit margin 25% 21

22 Conference Ltd FOOD BEVERAGE FLOWERS

23 »Relevance - the logical connection with, or bearing upon, the purpose of the audit procedure and, where appropriate, the assertion under consideration.»reliability - of information to be used as audit evidence, and therefore of the audit evidence itself, is influenced by its source and its nature, and the circumstances under which it is obtained, including the controls over its preparation and maintenance where relevant. 23

24 »The items for testing - sufficiency.»available for selecting items for testing are: (a) Selecting all items (100% examination); (b) Selecting specific items; and (c) Audit sampling. The application of any one or combination of these means may be appropriate depending on the particular circumstances. 24

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