Question

• What documentation builds assurance in a client or other users of financial statements, that an auditor will carry out or carried out the audit in fairness and so the financial documents are reliable?

Answer 1

Documentation is very critical part in every type of audit.

Documentation includes all the collected evidences by the auditor and bases for estimations made by management.

In some critical situations audit documentation helps the auditor to prove that the auditor has discharge in his responsibilities very properly and proper documentation saves auditors before law if client sues the auditor for his professional negligence in the audit.

Majorly documentation includes :-

1. Audit evidences collected from internal sources, external sources and collected from those charged with governance.

2. Documentation starts with understanding the environment of the entity.

3. the internal control questionnaires which was prepared by auditors and answered by employees of the company or entity will be documented.

4. Based on the answers got through internal control questionnaires the audit team will plan its audit plan, procedures and techniques to be used.

5. Audit plan will be documented and all the duties of the audit segregated among the audit team and the people who are responsible for each segment will be documented. All the evidences collected by the people who did the audit from their particular area and they document all those collected evidences.

6. By documenting all the evidences, still if auditor has any ambiguity at any particular area they may ask management to give management representation letter regarding the particular area. Those management representation letters will be documented because in many situations management representation letter will act as audit evidence.

7. based on the audit evidence is collected and management representation letter received from management collectively, auditor comes to a conclusion and express opinion on the financial statements.

Client will get assurance after saying all these documentation done by auditor and the client will rely on the work of auditors.

By seeing the entire documentation of the audit the client will understand how much extent the auditor has verified each and every area of the financial statements, by this client get assurance on the work of auditors.

These are all the information required to solve there were given question.

If there is any clarifications required regarding the above provided answer, please mention them in comment box.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.