Question

Your firm's triennial Peer Review is coming up in a couple of months, and your firm's managing partner has tasked you with the responsibility of updating the firm manual.  He is especially concerned about the chapter setting forth the firm's documentation standards, because it shows 2002 as the most recent revision date. He is certain standards must have changed since then. He wants you to toss out the existing chapter and start afresh. Create a chapter to be incorporated into your CPA firm's training manual. The topic of your chapter is the firm's standards for audit documentation. 

Answer 1

The standards on the audit documentation have been changing from time to time. This has been marching the need to have better results on the audited reports. As a matter of fact, the audit documentation ought to serve two major aspects. The documentation ought to be good enough to help the auditor to conduct further audit and also be able to support the auditor’s report. The various standards that need to be initiated by firms include the following:
•The standards should enable the engagement team to understand the extent of the audit procedures, the resulting issues, timing as well as the nature of the audit report •The documentation should entail the various engagement members who performed the audit procedures and came up with a report.
•The material misstatement risk ought to be included in the report and the documentation as it has been associated to the assertions made.
•The extent that the auditor applies in making the opinion on the procedures carried out should also be included in the documentation
•The nature of the auditing procedures used during the audit process ought to be brought out and elaborated in the documentation.
•The significance to the assertions made on the evidence collected by the auditor should also be tested.
•The extent and the nature of the exceptions that the auditor makes should be well covered in the audit documentation.
•Another major requirement on the standards of firm audit documentation is the need to have the conclusion made by the auditor documented. The basis used at arriving at the conclusion should also be included in the documents carrying the work done by the auditor.
Conclusion
The nature of the standards involved in the audit for the organization keeps on changing. This is mainly contributed by the changing nature of audit process and procedures. There is the need to have a more impactful process of auditing. For this to be attained the standards must match the increasing need for better and factual; evidence. For this reason, the above standards ought to be observed in the audit procedures.