Improving audit documentation

At a recent meeting, the International Auditing and Assurance Standards Board of the International Federation of Accountants approved a revised international standard on auditing, “Audit documentation.” The standard will contribute to enhancing auditor performance and audit quality by establishing stricter requirements for audit documentation.

To establish the level and completeness of documentation, the standard requires that the auditor prepare audit documentation sufficient to allow an experienced auditor who has had no previous connection with the audit to understand the audit work performed, the audit evidence obtained, the significant matters arising during the audit and the conclusions reached.

The standard establishes clear responsibilities for the auditor to assemble the final audit file on a timely basis and sets out specific rules regarding deletions, modifications or additions to audit documentation after the date of the auditor’s report.

IAASB Chair John Kellas explains: “The standard introduces important changes designed to improve the quality of audit documentation that the auditor prepares and retains. It requires the auditor to prepare documentation promptly and to close the files within a reasonable time. It also severely limits the amendments that can be made to a closed file to certain exceptional circumstances. There are new documentation requirements for those very rare occasions when an auditor finds it necessary to depart from the requirement of a standard in order to achieve the objective of the audit. The IAASB thinks that it is in the public interest that the auditor should be required to document the circumstances in the working papers.”

The standard is effective for audits of financial periods beginning on or after June 15, 2006. It may be downloaded at no charge from www.ifac.org/store.