Skip to content

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

Zenith Pharma Ltd, a small unlisted company, has a simple structure. Its auditor asks whether the assessment of risks must follow one prescribed documentation format. Under SA 315, which is correct?

The auditor decides how to document the risk assessment using professional judgment. For a small entity it may be included in the documentation of the overall audit strategy and plan. The form and extent depend on the entity's nature, size, complexity and the audit methodology used.

  1. AThe manner of documenting the risk assessment is for the auditor to decide by professional judgment, and for small entities it may be part of the overall strategy and audit planCorrect
  2. BA separate standalone risk assessment memo is mandatory for every entity
  3. CDocumentation is unnecessary for small entities
  4. DDocumentation must follow the format prescribed by the company's management

Explanation

The text states that the manner of documentation is for the auditor to determine using professional judgment. In small entity audits it may be incorporated into the documentation of the overall strategy and audit plan. Form and extent depend on the entity's nature, size and complexity, so a mandatory standalone memo or management-set format is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Audit Process and Documentation shows your real accuracy, how long you take and where you lose marks.

Practise Audit Process and DocumentationFree diagnostic mock

More Audit Process and Documentation questions