The following requirements relate to Ms. Stitt’s testimony about the audit workpapers:

Question

A) Based on your review of requirements in auditing standards related to auditor documentation why
must auditors prepare audit documentation?
B) Discuss the concept of “experienced auditors” as described in auditing standards and highlight how
that concept relates to the form, content, and extent of audit documentation.
C) Summarize the requirements in auditing standards for identifying the preparer and reviewer of audit
documentation. Is Ms. Stitt’s testimony consistent with those requirements? Briefly explain.
D) Summarize the responsibilities for reviewing audit documentation as described in auditing standards.

Answer 1

A) AU-C Section 230, “Audit Documentation,” and PCAOB AS 1215, “Audit Documentation,” require
the auditor to prepare audit documentation in connection with each engagement in sufficient detail
to provide a clear understanding of the work performed (including the nature, timing, extent, and
results of audit procedures), the audit evidence obtained and its source, and the conclusions reached.
Audit documentation provides the principal support for the representation in the auditor’s report
that the audit was performed in accordance with generally accepted auditing standards and audit
documentation provides the principal support for the opinion expressed B) AU-C Section 230 and PCAOB AS 1215 require the auditor to prepare audit documentation that enables an experienced auditor, having no previous connection to the audit, to understand the following:
i. The nature, timing, and extent of auditing procedures performed to comply with auditing
standards and applicable legal and regulatory requirements;
ii. The results of the audit procedures performed and the audit evidence obtained;
iii. The conclusions reached on significant matters; and
iv. That the accounting records agree or reconcile with the audited financial statements or other
audited information.
An experienced auditor means an individual (whether internal or external to the firm) who possesses
the competencies and skills that would have enabled him or her to perform the audit.
C) AU-C Section 230 and PCAOB AS 1215 require that the audit documentation record who performed
the audit work and the date such work was completed and who reviewed specific audit documentation
and the date of such review. Each working paper does not need to include specific evidence of review.
But, it should be clear from the audit documentation who reviewed specified elements of the audit
work performed and when.
Ms. Stitt’s testimony about initialing working papers is consistent with the spirit of AU-C 230
and PCAOB AS 1215. As she noted, a reviewer should not initial a working paper until that person is
comfortable with the work performed and conclusions reached as documented on the working paper.
D) The first standard of fieldwork requires that the audit be properly planned and supervised. AU-C
Section 300, “Planning an Audit,” notes that supervision involves directing the efforts of assistants who
are involved in accomplishing the objectives of the audit and determining whether those objectives
were accomplished. For the audits of public companies, PCAOB AS 1201, “Supervision of the Audit,”
provides guidance related to the supervision of the audit. One element of supervision includes
reviewing the work performed. Auditing standards note that the work performed by each assistant,
including the audit documentation, should be reviewed to determine whether it was adequately
performed and documented and to evaluate the results, relative to the conclusions to be presented in
the auditor’s report. The person with final responsibility for the audit may delegate parts of the review
responsibility to other assistants.