Auditing Procedures

According to the Public Company Accounting Oversight Board regulations, all registered public accounting firms are required to prepare and maintain audit documentations going back to a period of at least seven years. Audit documentation has been made a priority by the Board and the documentation made ought to give sufficient details that will be used to support the conclusions drawn in the auditor’s report. Through audit documentation, auditors are able to support conclusions made in their reports by showing their work product. They are also able to assist in planning, performance and supervising all engagements. Documentation of the conclusions made by the auditor also helps by creating a means to assess the quality of work that was done.

Due to its importance, auditors have various responsibilities when reviewing audit documentation and they must ensure that they abide by the auditing standards that have been set. They have a responsibility to ensure that they adhere to the standards set by PCAOB and must therefore prepare audit documentation for every engagement they conduct in the reviews. The documentation should be prepared in a way that its purpose is easily understood. This could be achieved by ensuring to use sufficient details so as to explain the conclusions that were reached at the end. The documentation should also be well organized so as to create a systematic flow among the conclusions drawn and the issues addressed (PCAOB 1).

Auditors also bear the responsibility of producing clear and comprehensive audit documentation and conducting meaningful reviews. This is because they not only enhance the audit quality but also makes it possible for the Board to inspect the registered public accounting firms, assessing whether they are compliant with the set standards and laws of operation. The compliance and reliability of these firms is therefore dependent on the assessment made by the board based on their audit documentation (PCAOB 1). This is especially because the Board is of the opinion that it is the record of the work audit performed, the conclusions that were drawn by the auditor and information the auditor used to support his conclusions that determine the integrity and quality of a firm’s audit. If the documentation was inadequate, the reviews would not be meaningful and the board may see this as a sign of poor quality audits. 

Audit reviews also need to be based on factual, accurate and adequate information. If conducted well, the information on the audit documentation should be sufficient and easily understood by another auditor even if he does not have any prior involvement with the audit. This will help the auditor conducting a review to understand the work that was done, the identity of who did the work, the date and the type of conclusions drawn (PCAOB 1). The auditor should also find it easy to note any other person who may have previously reviewed the work and when the review was conducted. Such information will be sufficient as it will help the auditor to note all the work that was involved in the audit. In the case of Miss Stitts, her testimony was greatly influenced by the quality of the audits as she had to answer questions based on audits that were conducted more than seven years ago (Beasley et al 74). It is therefore important to maintain adequate documentation even when conducting reviews. Failure to document work raises questions as to whether the work was done, the conclusions drawn and how these conclusions were reached. Auditors therefore have a responsibility to ensure proper documentation is done to enhance the efficiency of their reviews.

 

 

References

Public Company Accounting Oversight Board, “Auditing standard No.3: Audit documentation” 2016, retrieved from,            https://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_3_Appendix_A.aspx

Beasley S, Buckless A, Glover M and Prawitt F, “Auditing cases: An interactive learning             approach” Pearson Education, Inc. 2015