Cost and Management Audit · Cost Audit Documentation, Audit Process and Execution

SCA 102 Requirements: Preparation and Contents of Cost Audit Documentation

Updated 11 October 2026 · Fact-checked

SCA 102 requires the cost auditor to record the procedures performed, evidence obtained and conclusions reached (para 5.1). The file must let another competent person with no connection to the audit understand the work (para 5.2). It must be prepared on a timely basis (para 5.6). Late or extra work after the report date must be documented (para 5.7).

Understand Requirements of SCA 102: Preparation and Contents of Documentation

Audit documentation means the records, in physical or electronic form, including working papers, prepared by and for, or obtained and retained by the cost auditor in connection with the audit (para 4.2). Audit working papers are the documents that record all audit evidence obtained. They support the work done and give assurance that the audit followed the Cost Auditing Standards (para 4.6).

Why does it matter? The objective of SCA 102 is to give a sufficient and appropriate record of the basis for the Cost Auditor's Report. It must also be evidence that the audit was planned and performed in line with the Cost Auditing Standards and legal and regulatory requirements (para 2). If it is not documented, you cannot prove you did it.

Para 5.1 is the core rule. The cost auditor records the audit procedures performed, the relevant audit evidence obtained and the conclusions reached.

Para 5.2 sets the test of sufficiency. Your file must let another competent person, with no previous connection to the audit (including a peer reviewer), understand five things:

(a) conformance of procedures with legal and regulatory requirements
(b) conformance to the Cost Auditing Standards
(c) the results of the procedures performed
(d) the audit evidence obtained
(e) significant matters, the conclusions reached and significant professional judgments made

Two more requirements matter. Documentation must be prepared on a timely basis (para 5.6). If, in exceptional circumstances, you perform new or additional procedures or draw new conclusions after the date of the Cost Audit Report, you must document those circumstances and the procedures performed (para 5.7).

Key rules to remember

Para 5.1: What to record: Procedures performed + evidence obtained + conclusions reached; These three items must be recorded as part of the audit documentation.
Para 5.2: Sufficiency test: Another competent person, with no previous connection to the audit, can understand (a) to (e); Includes a person doing peer review. Learn the five items: legal conformance, SCA conformance, results, evidence, significant matters and judgments.
Para 5.6: Timing: Prepare documentation on a timely basis; Para 6.14: documentation prepared after the work is likely to be less accurate.
Para 5.7: After report date: New or additional procedures or new conclusions after the report date → document the circumstances and procedures; Applies in exceptional circumstances.
Para 6.6: Evidence of conformance (examples): Audit plan, signed appointment letter, minutes of discussions with client personnel, minutes of audit team discussions; Minutes should name team members present, particularly the audit partner when present.
Para 6.16: Assembly and retention: Assemble as the audit goes on; complete final file within a reasonable time; no deletion before the retention period ends; Final assembly should be limited work.

How to solve Requirements of SCA 102: Preparation and Contents of Documentation questions

Use this method for any question on what to document, how to document it or whether a file is adequate.

1Identify the issue: contents, timing, sufficiency, significant matters or post-report work.
2Quote the base rule: record procedures performed, evidence obtained and conclusions reached (para 5.1).
3Apply the para 5.2 test: would another competent person with no prior connection understand the work?
4Map the facts to the five items (a) to (e) and note which one is missing or weak.
5For judgment areas, say they are significant matters needing documented conclusions and judgments (para 6.8). Example: normal capacity for overhead absorption.
6Check timing: was it prepared as the audit went on (para 5.6, 6.14)? Was the final file assembled in reasonable time (para 6.16)?
7If work happened after the report date, apply para 5.7.
8Conclude with a clear statement: adequate or inadequate, and what the auditor should do.

Quickest way: The 5.1 + 5.2 + 5.6 check

When to use it: Use it for MCQs and short case questions where you must judge whether documentation is adequate.

Ask: are procedures, evidence and conclusions all recorded?
Ask: could a stranger follow it?
Ask: was it prepared on time?
Ask: are significant matters and judgments recorded?
Ask: was any post-report work documented?
The first 'no' is your answer.

Common mistakes in Requirements of SCA 102: Preparation and Contents of Documentation

Listing only the evidence collected and ignoring conclusions.
Students think working papers are just collections of documents.
Fix: Para 5.1 needs procedures, evidence and conclusions. Always state all three.
Forgetting the 'no previous connection' test in para 5.2.
Students write that documentation should be 'complete' without a standard.
Fix: Say it must let another competent person with no previous connection, including a peer reviewer, understand the work.
Treating documentation as something to finish after the report is signed.
Pressure of deadlines pushes paperwork to the end.
Fix: Para 5.6 and 6.14 require timely preparation. Late documentation is likely to be less accurate.
Recording only calculations for judgmental areas.
Numbers feel like proof.
Fix: Para 6.8 says matters like normal capacity need documented conclusions and professional judgment, not mere calculations.
Ignoring work done after the report date.
Students assume the file closes with the report.
Fix: Para 5.7 requires you to document the exceptional circumstances and the extra procedures performed.
Discarding papers once the final file is assembled.
Students think assembly ends the duty.
Fix: Para 6.16: do not delete or discard documentation of any nature before the end of its retention period.

Worked examples

Example 1

A cost auditor completes audit work for a manufacturing company. The file contains copies of invoices and a calculation of overhead absorption using a normal capacity figure, but no note on how normal capacity was determined. The file was prepared in the week after the report was signed. Comment on its adequacy under SCA 102.

Show the solution

Base rule: para 5.1 requires procedures, evidence and conclusions to be recorded. The file has some evidence and a calculation, but conclusions are missing.
Significant matter: para 6.8 says the determination of normal capacity is a significant matter requiring considerable judgment, which must be adequately documented along with conclusions reached.
Sufficiency: under para 5.2(e), another competent person with no previous connection could not understand the judgment behind the capacity figure.
Timing: para 5.6 requires timely preparation, and para 6.14 says documentation prepared after the work is likely to be less accurate. Preparing it after the report was signed is a weakness.
Conclusion: the file is inadequate.

Answer: The documentation does not comply with SCA 102. It lacks the conclusion and professional judgment on normal capacity (paras 5.1, 5.2(e), 6.8) and was not prepared on a timely basis (paras 5.6, 6.14). The auditor should document the basis of the normal capacity judgment and the conclusion reached.

Example 2

List what a cost auditor's documentation should enable another competent person to understand, and give examples of evidence of conformance with Cost Auditing Standards.

Show the solution

Para 5.2 test: another competent person with no previous connection to the audit, including a peer reviewer.
List items: (a) conformance with legal and regulatory requirements; (b) conformance to Cost Auditing Standards; (c) results of procedures; (d) audit evidence obtained; (e) significant matters, conclusions and professional judgments.
Para 6.6 examples of evidence for (b): a documented audit plan, the signed appointment letter from the auditee, minutes of discussions with client personnel, minutes of audit team discussions.
Add that minutes should name the team members present, particularly the audit partner when present.

Answer: The file must let another competent person with no prior connection understand items (a) to (e) of para 5.2. Evidence of conformance includes the audit plan, signed appointment letter, and minutes of discussions with client personnel and within the audit team, naming those present (para 6.6).

Exam tips

Memorise para 5.2 (a) to (e) as a five-item list. It is the most testable part.
In case questions, spot the trigger: late preparation (5.6), post-report work (5.7), or an unrecorded judgment (5.2(e), 6.8).
Quote para numbers where you are sure: 5.1, 5.2, 5.6, 5.7 are in the supplied text.
Normal capacity for overhead absorption is the standard example of a significant matter. Use it.
For MCQs, watch for options that say documents may be discarded after the final file is assembled. That is wrong before the retention period ends.

Practice questions from Cost Audit Documentation, Audit Process and Execution

Requirements of SCA 102: Preparation and Contents of Documentation: frequently asked questions

What does SCA 102 require a cost auditor to record?

Para 5.1 requires the cost auditor to record the audit procedures performed, the relevant audit evidence obtained and the conclusions reached. This is the base requirement for all cost audit documentation.

How detailed should cost audit working papers be?

Detailed enough that another competent person with no previous connection to the audit, including a peer reviewer, can understand the work (para 5.2). That covers legal conformance, standards conformance, results, evidence, and significant matters with conclusions and judgments.

When should cost audit documentation be prepared?

On a timely basis, as the audit goes on (para 5.6). The guidance notes that documentation prepared after the work is likely to be less accurate than documentation prepared during execution.

What if the auditor does new work after the cost audit report date?

In exceptional circumstances, if the auditor performs new or additional procedures or draws new conclusions after the report date, the circumstances and details of the procedures must be documented (para 5.7).