Auditing Chapter 5 Class Notes

2/26/25 ACCT 4290 – Auditing Smith



Chapter 5
Learning objectives 6-8
PowerPoint Slides 23-
Audit documentation: Auditor’s record of the audit procedures performed,
relevant audit evidence obtained, and conclusions the auditor reached.
 Three purposes of audit documentation:
o To provide support for the audit report.
o To aid in the planning, performance, and supervision of the audit.
o To provide a focal point for reviewing work of subordinates; to
provide a basis for quality reviews.
 Audit documentation should:
o Demonstrate how the audit complied with auditing and related
professional practice standards.
o Support the basis for the auditor’s conclusions concerning each
material
financial statement assertion.
o Demonstrate whether the underlying accounting records agreed
or reconciled with the financial statements.
o Include a written audit program detailing auditing procedures
necessary to accomplish audit objectives.
o Enable a knowledgeable and experienced reviewer to:
 Understand the nature, timing, extent, and results of audit
procedures, evidence obtained, and conclusions reached.
 Determine who performed and reviewed the work, as well
as the dates of the work and reviews.
Most public accounting firms maintain audit documentation in two types of
files:
 Permanent files:
o Corporate Charter
o Important contracts
o Chart of accounts
o Internal control documentation
o Organization chart
o Terms of stock and bond issues
o Prior years’ analytical procedures
o Prior years’ analytical procedure results
 Current files
o Adjusting journal entries
o Audit plan and programs
o Reclassification journal entries