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

Meera Iyer is auditing Kaveri Textiles Ltd for the second consecutive year. Business operations and processes are largely unchanged, except that a new ERP module for payroll was introduced this year. Her junior asks if last year's understanding documentation can be reused. What does SA 315 (as reproduced) permit?

In recurring audits, certain documentation may be carried forward, but it must be updated as necessary to reflect changes in the entity's business or processes. The new ERP payroll module is such a change, so the prior-year file needs updating rather than blind reuse.

  1. APrior-year documentation may be carried forward, updated for changes such as the new ERP moduleCorrect
  2. BPrior-year documentation cannot be reused under any circumstance
  3. CPrior-year documentation may be carried forward only without any updates
  4. DThe understanding need not be documented in recurring audits

Explanation

SA 315 provides that for recurring audits certain documentation may be carried forward, updated as necessary to reflect changes in the entity's business or processes. The new payroll module is such a change and must be reflected. Carrying forward unchanged ignores the change.

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