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CA Intermediate · Auditing and Ethics · Audit Documentation

A new audit assistant at Bhatt & Co. asks why the firm insists on documenting significant matters and professional judgements on the audit of Orion Auto Ltd. as an experienced auditor's 'understanding' standard. Which statement correctly describes the benchmark SA 230 uses for the sufficiency of documentation?

The benchmark is an experienced auditor with no previous connection to the audit. Documentation must let that person understand the procedures performed, the results and evidence obtained, and the significant matters and professional judgements made, without relying on oral explanations.

  1. AIt must enable an experienced auditor having no previous connection with the audit to understand the procedures performed, results and significant judgementsCorrect
  2. BIt must enable the client's management to understand the audit approach and adopt it
  3. CIt must be sufficient for the engagement partner alone to recollect the work done
  4. DIt must be as short as possible and rely on the team's oral explanations in the event of a query

Explanation

SA 230 says documentation must be sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of procedures performed, the results and evidence obtained, and significant matters and judgements. Reliance on oral explanations or the partner's memory is not sufficient, and the benchmark is not the client's management.

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