HKSA 230 - Audit Documentation (Condensed)

Scope, Purpose & Objective (Para 1-6)

Scope, Purpose & Objective

Scope of HKSA 230

HKSA 230 deals with the auditor's responsibility to prepare audit documentation for an audit of financial statements. The Appendix lists other HKSAs with specific documentation requirements. Law or regulation may establish additional documentation requirements.

Nature and Purposes of Audit Documentation

Audit documentation provides:

• Evidence of the auditor's basis for a conclusion about achieving overall objectives (HKSA 200, para 11)
• Evidence that the audit was planned and performed in accordance with HKSAs and applicable legal/regulatory requirements

Additional purposes include:

• Assisting the engagement team to plan and perform the audit
• Assisting supervision and review responsibilities (HKSA 220 Revised)
• Enabling accountability for work
• Retaining records of continuing significance for future audits
• Enabling engagement quality reviews (HKSQM 2), monitoring (HKSQM 1), and external inspections

Effective Date

Effective for audits of financial statements for periods beginning on or after 15 December 2009.

Objective

The auditor's objective is to prepare documentation that provides:

1. A sufficient and appropriate record of the basis for the auditor's report
2. Evidence that the audit was planned and performed in accordance with HKSAs and applicable legal/regulatory requirements

Key Definitions (Para 5)

Key Definitions

Timely Preparation & Sufficiency Standard (Para 7-8)

Timely Preparation & Sufficiency Standard

Timely Preparation (Para 7)

Rationale (A1): Preparing sufficient and appropriate audit documentation on a timely basis enhances audit quality and facilitates effective review and evaluation before the auditor's report is finalized. Documentation prepared after the work is performed is likely to be less accurate.

Sufficiency Standard (Para 8)

Factors Affecting Form, Content & Extent (A2)

• Size and complexity of the entity
• Nature of audit procedures
• Identified risks of material misstatement
• Significance of audit evidence obtained
• Nature and extent of exceptions identified
• Need to document conclusions not readily determinable from work performed
• Audit methodology and tools used

Documentation of Procedures & Evidence (Para 9-11)

Documentation of Procedures & Evidence

Identifying Characteristics, Preparer & Reviewer (Para 9)

The auditor shall record:

• (a) The identifying characteristics of specific items or matters tested
• (b) Who performed the audit work and the date completed
• (c) Who reviewed the work and the date and extent of review

Examples of Identifying Characteristics (A12)

Documentation of Significant Discussions (Para 10)

Documentation of Inconsistencies (Para 11)

Departures & Post-Report Matters (Para 12-13)

Departures & Post-Report Matters

Departure from a Relevant Requirement (Para 12)

When a requirement is not relevant (A19):

• The entire HKSA is not relevant (e.g., no internal audit function)
• The requirement is conditional and the condition does not exist (e.g., no inability to obtain sufficient appropriate audit evidence)

Matters Arising after the Date of the Auditor's Report (Para 13)

Example (A20): Facts become known after the auditor's report date that existed at that date and might have caused the financial statements to be amended or the opinion to be modified (HKSA 560, para 14).

File Assembly & Retention (Para 14-16)

File Assembly & Retention

Assembly of the Final Audit File (Para 14)

Time limit (A21): Ordinarily not more than 60 days after the date of the auditor's report.

Administrative process (A22): Does not involve performing new audit procedures or drawing new conclusions. Examples of administrative changes:

• Deleting or discarding superseded documentation
• Sorting, collating and cross-referencing working papers
• Signing off on completion checklists
• Documenting audit evidence obtained, discussed and agreed before the auditor's report date

Retention Period (Para 15)

Retention period (A23): Ordinarily no shorter than five years from the date of the auditor's report, or if later, the date of the auditor's report on the group financial statements.

Post-Assembly Changes (Para 16)

Application Guidance & Small Entity Considerations (A1-A24)

Application Guidance & Small Entity Considerations

Documentation Media and Examples (A3-A5)

Audit documentation may be recorded on paper, electronic, or other media. Examples include:

• Audit programs
• Analyses
• Issues memoranda
• Summaries of significant matters
• Letters of confirmation and representation
• Checklists
• Correspondence (including e-mail) concerning significant matters

Not required to include: Superseded drafts, notes reflecting incomplete thinking, previous copies corrected for typographical errors, duplicates.

Oral explanations alone do not represent adequate support for work performed or conclusions reached.

Documentation of Compliance with HKSAs (A6-A7)

Compliance with HKSA 230 results in sufficient and appropriate documentation. It is neither necessary nor practicable to document every matter considered. Examples of demonstrated compliance:

• An adequately documented audit plan demonstrates planning
• A signed engagement letter demonstrates agreed terms
• An appropriately qualified auditor's report demonstrates compliance with opinion requirements

Significant Matters and Professional Judgments (A8-A11)

Examples of significant matters:

• Matters giving rise to significant risks
• Results indicating material misstatement or need to revise risk assessments
• Circumstances causing significant difficulty in applying procedures
• Findings that could result in modified opinion or Emphasis of Matter paragraph

A completion memorandum summarizing significant matters and how they were addressed may be helpful, especially for large and complex audits.

Smaller Entity Considerations (A16-A17)

Audit documentation for smaller entities is generally less extensive. When the engagement partner performs all work, documentation will not include matters solely to inform team members or provide evidence of review by others. It may be efficient to record various aspects together in a single document with cross-references.

Appendix: Specific Documentation Requirements in Other HKSAs

Appendix: Specific Documentation Requirements in Other HKSAs

The following paragraphs in other HKSAs contain specific documentation requirements: