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CA Intermediate · Auditing and Ethics · Audit Documentation

While auditing Nirmal Pharma Ltd., the audit senior records in the working paper that the team 'checked purchase invoices' for a sample of items. The manager objects that this is inadequate. Which documentation approach best meets SA 230 for tests of details using sampling?

The auditor should record identifying characteristics of the items tested, such as invoice numbers and dates, together with who performed the work and when it was completed, and the reviewer details. This lets an experienced auditor unconnected with the engagement understand the work, which a mere count or conclusion does not.

  1. ARecord only the total number of invoices examined
  2. BRecord the identifying characteristics of the specific items tested, such as invoice numbers and dates, who performed the work and when it was completedCorrect
  3. CRecord only the names of the vendors of the invoices examined
  4. DRecord only the conclusion that the purchases are fairly stated

Explanation

SA 230 requires documentation of the identifying characteristics of the specific items or matters tested, along with who performed the work, the date completed, and who reviewed it with date and extent. A total count or a bare conclusion does not allow an experienced auditor with no connection to the audit to understand what was tested.

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