The Runner's Shop-Case Study 11.1-Auditing Cases
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 documentation is an essential element of audit quality” and AU 339.05 further states that “audit documentation is the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached”. Thus individuals can review the audit documentation to see that the audit was performed in accordance with GAAS, they can identify the reasons for the auditor’s opinion, and they can evaluate the quality of the audit.
Paragraph 8 of AU 339 provides a list of additional purposes of audit documentation:
• The audit team will use audit documentation to help plan and perform the audit. It is necessary to plan the audit so that the audit team is aware of the work that needs completed and they have a better idea of how long the engagement will last. The audit team will use the audit documentation when identifying the level of risk they will accept and any high risk areas that need closer examination. The use of audit documentation to perform the audit is essential so that the audit team have an accurate picture of the company’s financial information.
• Auditors who are new to the engagement can review audit documentation from the prior year to get a better understanding of the work performed.
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 documentation is an essential element of audit quality” and AU 339.05 further states that “audit documentation is the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached”. Thus individuals can review the audit documentation to see that the audit was performed in accordance with GAAS, they can identify the reasons for the auditor’s opinion, and they can evaluate the quality of the audit.
Paragraph 8 of AU 339 provides a list of additional purposes of audit documentation:
• The audit team will use audit documentation to help plan and perform the audit. It is necessary to plan the audit so that the audit team is aware of the work that needs completed and they have a better idea of how long the engagement will last. The audit team will use the audit documentation when identifying the level of risk they will accept and any high risk areas that need closer examination. The use of audit documentation to perform the audit is essential so that the audit team have an accurate picture of the company’s financial information.
• Auditors who are new to the engagement can review audit documentation from the prior year to get a better understanding of the work performed.