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CA Intermediate · Auditing and Ethics · Audit Documentation

While auditing Kaveri Textiles Ltd, CA Anand discusses a significant inventory valuation issue with the finance head over several emails and a meeting, and reaches a conclusion. Under SA 230, what is the appropriate way of recording this in the audit file?

The auditor should document the discussion of the significant matter, stating its nature, the participants, the date and the conclusion reached. SA 230 expects discussions with management on significant matters to be recorded so an experienced auditor can understand what happened.

  1. ADocument the discussion, including the nature of the matter, who took part, when it took place and the conclusion reachedCorrect
  2. BNo documentation is needed because the discussion was verbal and the conclusion matches management's view
  3. CRetain only the emails, since SA 230 does not allow meeting discussions to be documented
  4. DRecord only the final conclusion without mentioning the participants or the date

Explanation

SA 230 requires the auditor to document discussions of significant matters with management and others, including the nature of the matters, when and with whom the discussion took place. A bare conclusion or an omission fails this requirement.

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