The fifth in a series of six blogs, authored by our CaseWare Cloud SMSF Audit product content provider Sharlene Anderson and the Veritas Corp team. Sharlene focuses on a key SMSF Audit process for each of these blogs and recommends what to include in your documentation to ensure you complete and gather adequate evidence for a high quality, compliant audit.
SMSF audits are conducted in accordance with Australian auditing standards and standards on assurance engagements. The documentation requirements of the standards are exhaustive. It is vitally important that each audit file can stand alone and support both compliance with the standards and the audit opinions. If a procedure or test is not documented, the auditor has no evidence that it was performed. If an audit file should be called into question, and this can happen at professional body Q & A review as well as litigation by clients, the auditor with a well-documented, compliant audit file will have much firmer ground to stand upon.
Disclaimer This paper represents the opinion of the author(s). The contents are for general information only. They are not intended as professional advice – for that you should consult a suitably qualified professional. Veritas Corp expressly disclaims all liability for any loss or damage arising from reliance upon any information in this paper.
Part 5: Understanding Key Requirements of ASA 230 – Audit Documentation
In a perfect world, an Audit Standard titled ‘Audit Documentation’ would provide a definitive list of everything that must be documented in an audit file. Unfortunately, we don’t have a perfect world scenario. Numerous other audit standards and ASAEs 3000 and 3100 include mandatory documentation requirements. (Appendix 1 of ASA 230 lists the other standards with mandatory documentation requirements). Furthermore, if any procedure performed to comply with the standards is not documented on the audit file it will not be possible for the auditor to evidence the procedure was in fact performed.
ASA 230 deals with the auditor’s responsibility to prepare audit documentation. The documentation is to provide the evidence of the auditor’s basis of opinion and that the audit was planned and performed in accordance with the audit standards. To this end the audit file must include sufficient appropriate audit evidence to support the auditor’s opinion (ASA 500).
The requirement is to prepare documentation on a ‘timely basis’. It is explained that this enhances the quality of the audit and facilitates the effective review and evaluation of the audit evidence and conclusions reached before the audit report is issued. Documentation prepared after the audit work has been performed is likely to be less accurate than documentation prepared at the time such work is performed.
The audit documentation must be sufficient to enable an experienced auditor, having no previous connection with the audit to understand the nature, timing and extent of procedures performed, results of those procedures and evidence obtained and significant matters arising during the audit, conclusions reached and the significant professional judgements in reaching those conclusions.
To comply with ASA 230 the audit documentation must record:
- Identifying characteristics of the specific items or matters tested.
- Who performed the audit work and the date such work was completed.
- Who reviewed the audit work performed and the date and extent of such review.
- Discussions of significant matters with management, those charged with governance, and others, including the nature of the significant matters discussed and when and with whom the discussion took place.
- How the auditor addressed any inconsistency between information regarding a significant matter and the auditor’s final conclusion.
- (In rare and exceptional circumstances) if an auditor is prevented from complying with standards requirements, they must document the circumstances, reasons and justification of how alternative procedures achieve the objective of the standard.
- Matters arising after the date of the auditors report as a result of new or additional audit procedures.
After the assembly of the final audit file the auditor shall not delete or discard audit documentation of any nature before the end of its retention period (ordinarily 5 years).
If the auditor finds it necessary to modify or add to the audit documentation after final file assembly, the auditor is required to document the specific reasons, and when and by whom they were made and revised.
How CaseWareCloud SMSF Audit can help
CaseWare Cloud SMSF Audit includes a number of handy documentation tools to help make this important element of an audit as easy to do as possible. Functions such as placeholders, annotations and issues help auditors track outstandings, flag their questions for accountants and document a clear audit trail.
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