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CA Intermediate · Auditing and Ethics · Audit Documentation

In the audit of Godavari Motors Ltd, the engagement team found information inconsistent with a conclusion on the valuation of inventory. Under SA 230, what should the auditor do regarding documentation?

The auditor must document how the inconsistent information was addressed and the conclusions reached on it. SA 230 requires this for significant matters, so omitting contrary evidence or merely relying on management's representation letter would leave the audit file incomplete and potentially misleading.

  1. ADocument how the inconsistency was addressed, including the conclusions reachedCorrect
  2. BExclude the inconsistent information because it contradicts the final conclusion
  3. CDocument only the information that supports the conclusion
  4. DMention it in the management representation letter instead of the audit file

Explanation

SA 230 requires that if the auditor identifies information inconsistent with the final conclusion on a significant matter, the auditor documents how the inconsistency was addressed. Omitting contrary information would make the file misleading. The representation letter does not substitute for audit documentation.

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