Documentation

Session objectives Define ‘good documentation’ To explain auditing standards on documentation To explain elements of documentation and working papers

What is ‘Good Documentation’ ‘Good documentation’ is one that an experienced auditor with no previous connection with the audit should be able, without difficulty, to ascertain the evidence gathered, to understand and to support the conclusions reached.

Documentation as per Auditing Standards Auditors should adequately document the audit evidence in working papers, including the basis and extent of the planning, work performed; and the audit findings. Working papers should contain sufficient information to enable an experienced auditor having no previous connection with the audit to ascertain from them the evidence that supports the auditor's significant findings and conclusions.

Document files A standard method of filing documents is essential. It should recognise that documents fall into two categories: A Guard File containing information of a more or less permanent nature relevant to the audit of the entity irrespective of the particular year in which it is being audited; A Current File relevant only to the audit of the entity for a particular year of account.

Guard File The documents to which the auditor needs to refer each year should be placed in a Guard File. This file should contain updated information about the organisation itself, such as: the authority for the audit governing legislation organisation chart and key personnel descriptions of accounting systems manuals systems evaluations Risk assessment of the entity

Current file Audit Plan Draft Account Current File Should be organised according to the Account Areas Profit and Loss Accounts (separately for each account area, e.g income, salaries, operating expenditure, etc.) Balance Sheet (again separately for each account area, e.g. fixed assets, cash, debtors, creditors etc.) Losses Audit Requisitions, Audit Queries and Audit Observations and replies thereto Internal Audit Report, if any Liaison Approved Audit Report (to be placed later)

Submission of audit documentation for review The last day of audit should generally be kept for organising and arranging for documentation. The team leader responsible for the supervision of the audit should submit to the first stage reviewer the working paper folders containing all the audit documentation. Separate sub-folders should be opened in the Current File for submission of the results of the audit (the examination sub-folder); and the signed accounts for certification (the certification sub- folder)

Examination sub-folder This sub-folder should contain: The team leader's submission to the first stage reviewer in the examination folder should include the Executive Summary and its supporting documents. The team leader should also state formally: that the audit has been completed; and his opinion as to whether a clear certificate can be given and, if not, his reasons for any proposed qualification.

Certification sub-folder This should contain the signed accounts appropriately ticked to indicate that they have been audited the letter which accompanied the signed accounts when they were sent for certification; and any further letters from the signatory to the accounts (or some authority empowered to act for him) authorising amendments to the accounts. In the accompanying submission, the team leader should clearly link the pages of the signed accounts with the results of examination of the accounts (the reference number of the examination sub-folder); the certificate he proposes whether any separate report on the accounts is under consideration.

Working papers As the working papers serve as a connecting link between the fieldwork and the audit report, they should be complete and appropriately detailed to provide a clear trail of the audit. The confidentiality of the working papers should be maintained and they should be retained for a period sufficient to meet the professional, legislative and legal requirements.

Broad characteristics of working papers Completeness and accuracy Clarity and conciseness Ease of preparation Legibility and neatness Relevance Ease of review Organisation and ease of reference

Use of electronic documentation Use of electronic documentation software will improve the quality of documentation. Electronic documentation software should be used in accordance with the instructions issued by the Headquarters Office, with provisions for adequate training of staff in their use.

Quality Assurance Adherence to the Field Standards and policies of CAG of India regarding audit completion Supervision, monitoring and review Standards and practices of Documentation of the fieldwork; and Peer review.