The Runner's Shop-Case Study 11.1-Auditing Cases Essay

2280 WordsApr 16, 200910 Pages
Case 11.1: The Runners Shop Relevant Guidance • AU 339 (SAS 103): Audit Documentation • Auditing Standard No. 3: Audit Documentation • International Standard on Auditing 230’ (Revised) (Site -http://irba.co.za/documents/doc_00535.pdf ) Questions 1] Describe the purposes of audit documentation and explain why each purpose is important. According to AU 339.03, “audit documentation provides the principal support for the”: (a) “representation in the auditor’s report that the auditor performed the audit in accordance with GAAS”, and (b) “opinion expressed regarding the financial information or the assertion to the effect that an opinion cannot be expressed”. AU 339.04 goes on to state that this “audit…show more content…
This information is needed in determining if the audit was performed in compliance with GAAS and whether the conclusions reached were adequately supported. • Audit documentation is used by the successor auditor when reviewing the predecessor auditor’s work. The successor auditor will review the previous year’s audit documentation to help gain a better understanding of the business, to identify any high risk areas that might affect acceptable level of risk, and to assist in planning the audit. Without this documentation it would be difficult for the successor auditor to achieve these goals. According to AS 3, Paragraph A8 “good audit documentation improves the quality of the work performed in many ways, including, for example: a) Providing a record of actual work performed, which provides assurance that the auditor accomplishes the planned objectives. b) Facilitating the reviews performed by supervisors, managers, engagement partners, engagement quality reviewers, and PCAOB inspectors. c) Improving effectiveness and efficiency by reducing time-consuming, and sometimes inaccurate, oral explanations of what was done (or not done)”. AS 3 goes on to state in paragraph A9 that “the documentation requirements in this standard should result in more effective and efficient oversight of registered public accounting firms and associated persons, thereby improving audit quality and enhancing investor confidence”. Paragraph 10 of AS 3 states that

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