The Runners Shop Essay example

2268 Words Nov 27th, 2015 10 Pages
Case 11.1: The Runners Shop

Relevant Guidance

• AU 339 (SAS 103): Audit Documentation

• Auditing Standard No. 3: Audit Documentation

• International Standard on Auditing 230’ (Revised) (Site -http://irba.co.za/documents/doc_00535.pdf )

Questions

1] Describe the purposes of audit documentation and explain why each purpose is important.

According to AU 339.03, “audit documentation provides the principal support for the”: (a) “representation in the auditor’s report that the auditor performed the audit in accordance with GAAS”, and (b) “opinion expressed regarding the financial information or the assertion to the effect that an opinion cannot be expressed”. AU 339.04 goes on to state that this “audit documentation is an
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• Audit team members in a supervisory role can use audit documentation to help direct and supervise the audit work. They can also use audit documentation to review the quality of the work performed. The audit team members who are supervising the audit procedures can efficiently perform their review if adequate documentation is available. This eliminates the need for oral communications that can be lengthy and inaccurate.

• Audit documentation includes the “procedures performed, the audit evidence examined, and the conclusions reached” by the audit team. This “demonstrates the accountability of the audit team for its work”. With adequate audit documentation it is clear what steps the audit team took when performing the audit, providing assurance that the work was performed as indicated. These steps can be traced to show that the correct conclusions were reached.

• Audit documentation is used in future audits of the company, recording any significant issues that would affect the audit opinion. It is possible that current high risk factors can pose a problem beyond the current year audit. Next year’s audit team will review this year’s audit documentation to identify these high risk factors that might affect the current year’s audit opinion.

• Audit documentation is used by quality control reviewers to help “understand how the engagement team

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