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CA Intermediate · Auditing and Ethics · Audit Documentation

An audit firm is auditing Bharat Steel Ltd for the first time. The engagement partner asks the senior to prepare documentation such that an experienced auditor with no previous connection with the audit can understand it. Which of the following must that documentation enable such an auditor to understand, as per SA 230?

The documentation must let an experienced auditor with no prior connection understand the nature, timing and extent of procedures performed, the results and evidence obtained, and the significant matters arising with the conclusions reached and professional judgments made, as required by SA 230.

  1. AOnly the final audit opinion and the fees charged for the engagement
  2. BThe nature, timing and extent of audit procedures performed, results obtained and the significant matters arising with conclusions reachedCorrect
  3. COnly the list of management representations received and the date of the board meeting
  4. DThe firm's internal profitability on the engagement and the staff costs incurred

Explanation

SA 230 requires documentation sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of the audit procedures performed, the results of those procedures and audit evidence obtained, and significant matters arising and conclusions reached. The other options cover items that are not the purpose of audit documentation.

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