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CS Professional · Compliance Management, Audit and Due Diligence · Audit Process and Documentation

A small firm audits Pushp Agro Pvt Ltd, a small entity. The auditor incorporates the documentation of the understanding of the entity and risk assessment into the documentation of the overall audit strategy and audit plan, instead of keeping a separate file. Which statement is correct under SA 315 guidance?

This is permitted. The manner of documenting is for the auditor to determine using professional judgment, and in audits of small entities the documentation may be incorporated in the overall audit strategy and audit plan. Results may also be documented separately or within documentation of further procedures.

  1. AThis is not permitted, because risk assessment must always be documented separately
  2. BThis is permitted, as the manner of documenting is for the auditor to determine using professional judgment, and small entity documentation may be incorporated in the overall strategy and audit planCorrect
  3. CThis is permitted only if the auditor has no specialists on the team
  4. DThis is permitted only if the entity has no internal control

Explanation

The guidance says the manner of documentation is for the auditor to decide using professional judgment, and gives as an example that in small entities it may be incorporated in the documentation of the overall strategy and audit plan under SA 300. It may alternatively be separate or part of documentation of further procedures. The conditions in the other options are not found in the text.

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