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

Gupta & Co. audits Himalaya Foods Pvt Ltd, a small entity. The partner asks where the documentation of the understanding of the entity may be placed. Which statement follows SA 315 guidance?

The manner of documentation is a matter of professional judgment. For small entities, SA 315 says the documentation may be incorporated in the auditor's documentation of the overall strategy and audit plan under SA 300, so a separate prescribed file is not mandatory.

  1. AIt must always be in a separate standalone file prescribed by ICAI
  2. BIn audits of small entities it may be incorporated in the documentation of the overall strategy and audit plan required by SA 300Correct
  3. CIt need not be documented for small entities
  4. DIt may be documented only after the audit report is signed

Explanation

SA 315 states the manner of documenting is for the auditor to determine using professional judgment, and for small entities the documentation may be incorporated in the documentation of the overall strategy and audit plan under SA 300. A fixed separate file is not required.

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