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Revised Implementation Guide to SA 230, Audit Documentation issued by the Auditing and Assurance Standards Board
December, 05th 2018
    Implementation Guide to
 Standard on Auditing (SA) 230,
      Audit Documentation
         (Revised 2018)




The Institute of Chartered Accountants of India
         (Set up by an Act of Parliament)
                    New Delhi
                                           Foreword

Standards on Auditing are critical in ensuring and enhancing
quality in audits of financial statements. It is therefore
necessary that the auditors properly understand and
implement these Standards in their audit engagements.
The Implementation Guides to Standards on Auditing are
important resource for auditors to understand the
requirements of these Standards and also help them in their
appropriate implementation. These Guides also provide
solutions to various practical problems faced by auditors in
implementing Standards on Auditing in real life audit
situations.
Audit documentation is an essential element of audit quality
and has always been a critical component of an audit
process as it evidences the work done by the auditor. I am
happy that the Auditing and Assurance Standards Board has
brought out this revised edition of the Implementation Guide
to SA 230, "Audit Documentation" whose first edition was
issued in 2013. The Implementation Guide has been written
in an easy to understand language in the form of frequently
asked questions (FAQs) on this Standard and responses to
those FAQs.
I wish to compliment CA. Shyam Lal Agarwal, Chairman,
Auditing and Assurance Standards Board (AASB) for
bringing out this Implementation Guide for the benefit of
members. I am sure that the members and other interested
readers would find this Implementation Guide useful in
discharge of their professional responsibilities.


December 03, 2018                  CA. Naveen N.D. Gupta
New Delhi                                  President, ICAI
                                                Preface

Standards on Auditing issued by the Institute of Chartered
Accountants of India lay down the fundamental principles of
audit to be followed by auditors while conducting audits of
financial statements. It is essential that auditors understand
and implement these Standards appropriately in their audit
engagements. Implementation Guides to Standards on
Auditing are issued by the Auditing and Assurance
Standards Board (AASB) of ICAI to assist auditors in
practical implementation of these Standards. Till date, AASB
has brought out a number of Implementation Guides.

Standard on Auditing (SA) 230, "Audit Documentation" is an
important standard which lays down the basic principles of
audit documentation. These principles need to be kept in
mind by auditors while complying with requirements of SA
230 and specific documentation requirements of other
Standards on Auditing. In 2013, AASB had issued the
"Implementation Guide to SA 230, Audit Documentation" to
provide practical implementation guidance on this Standard.
It gives me immense pleasure to place in hands of the
members, this Revised Implementation Guide to SA 230,
"Audit Documentation" brought out by AASB.

The Implementation Guide explains the requirements of the
Standard in a `Question and Answer' format. It also contains
checklists of documentation requirements.

I am extremely grateful to CA. Vimal Chopra, Jaipur, CA.
Bhupendra Mantri, Jaipur and CA. Vishnu Dutt Mantri,
Jaipur, who despite their pressing professional and other
preoccupations developed this Implementation Guide. I also
wish to thank CA. Deepa Agarwal and CA. Lalit Kumar for
their valuable inputs in finalising this Guide.
I wish to express my sincere thanks to CA. Naveen N.D.
Gupta, Honourable President, ICAI and Honourable Vice-
President, ICAI for their guidance and support to the
activities of the Board.
I wish to also place on record, the appreciation of Vice-
Chairman of the Board, all Members of the Board and the
Council for their suggestions, support and guidance in
finalising this Implementation Guide as well as other
pronouncements of the Board. I also wish to thank CA.
Megha Saxena, Secretary, other officers and staff of the
Board for their efforts and hard work.
I am confident that the Implementation Guide would be well
received by the members and other interested readers.


December 3, 2018                  CA. Shyam Lal Agarwal
Jaipur                                        Chairman,
                      Auditing and Assurance Standards Board
                                                            Contents

Foreword

Preface

Chapter 1: Summary of the Standard ................................... 1

Chapter 2: Introduction ........................................................ 4

Chapter 3: FAQs on SA 230 ................................................. 8

Chapter 4: Checklist............................................................ 51

Appendix: Illustrative Working Paper Format ...................... 54
            Chapter 1
Summary of the Standard
Implementation Guide to SA 230(Revised 2018)




                               2
Implementation Guide to SA 230(Revised 2018)




           3
                                               Chapter 2
                                            Introduction

Concept of Documentation

2.1     Audit, according to Spicer and Pegler, "may be said to be
such an examination of the books, accounts and vouchers of a
business as will enable the auditor to satisfy that the Balance
Sheet is properly drawn up, so as to give a true and fair view of
the state of affairs of the business and the Profit or Loss for the
financial period, according to the best of his information and the
explanations given to him and as shown by the books, and if not,
in what respect he is not satisfied."
2.2     Though the above definition addresses various aspects of
an audit, one of the most important and relevant issues arising out
of this definition is that the auditor needs to "satisfy himself that
the financial statements are properly drawn up...", "... according
to best of his information and explanations given to him...",
"... and if not, "in what respect the auditor is not satisfied".

2.3     An auditor, during the course of his audit may come across
various materials in the form of deeds, agreements, contracts,
invoices, vouchers, etc. which are the supporting materials to
evidence the happening of an event/transaction. These are the
basis for him to satisfy (or to not satisfy) himself in material
aspects as to whether the financial statements give a true and fair
view of the state of the affairs of the business and of the profit and
loss for that period.
2.4     A document is any material which provides evidence of
work performed, action taken or the happening of an event. It may
be in paper or electronic form. Examples of documents include
work papers, copy or abstract of signed agreements, videos,
pictures, spreadsheets, transcripts, correspondences, data in
electronic form containing the records in systemic manner etc.
                     Implementation Guide to SA 230(Revised 2018)

2.5    Oxford dictionary defines documentation "as material that
provides official information or evidence or that serves as a
record; the process of classifying and annotating texts,
photographs, etc".
2.6    SA    230,    "Audit  Documentation"    defines  audit
documentation as "The record of audit procedures performed,
relevant audit evidence obtained, and conclusions the auditor
reached (terms such as "working papers" or "work papers" are
also sometimes used".
2.7     Hence, "document", in the context of audit refers more to
that which is required to be maintained by an auditor to record his
findings during the course of the audit.

Why is Documentation Important?
2.8     Documentation is considered the backbone of an audit.
The work that the auditor performs, the explanations given to the
auditor, the conclusions arrived at, are all evidenced by
documentation. Poor documentation may depict poor performance
in an audit. The auditor may have executed appropriate audit
procedures, however, if there is no documentation to prove, it may
put question on the work done, in case any material misstatement
is reported. Improper and incomplete documentation, at times,
may put the auditor in embarrassing situations.
2.9    Documentation is essential because:
       It supports the auditor's basis for a conclusion about
       achieving the auditor's objectives.
       Provides evidence that audit was planned and performed.
       It assists supervision and review.
       It results in better conceptual clarity, clarity of thought and
       expression.
       It facilitates better   understanding     and    helps   avoid
       misconception.
       It supports and evidences compliance with standards,
       applicable legal & regulatory requirements.


                                 5
Implementation Guide to SA 230(Revised 2018)

Form and Content of Documentation
2.10 The form and content of audit documentation should be
designed to meet the circumstances as necessary of the particular
audit. It should satisfy the requirements of the governing
standards and substantiate the conclusions arrived at by the
auditor.

2.11 The form and content of documentation depends on
various factors such as:

         Size, nature and type of entity.
         Risk assessment.
         Materiality.
         Sampling methods, etc.
2.12 Documents are segregated into those forming part of the
Permanent Audit File and Current Audit File. Permanent audit file
contains those documents, the use of which is not restricted to
one time period, and extends to subsequent audits also. e.g.
Engagement letter, Communication with previous auditor,
Memorandum of Association, Articles of Association, Organization
structure, List of directors/partners/trustees/bankers/ lawyers, etc.
On the other hand, a current audit file contains those documents
relevant for that time period of audit.
2.13     Documentation includes the following:
       Understanding the entity.
       Time and cost constraints.
       Audit programme.
       Risk assessment.
       Team discussion.
       Working papers pertaining to significant areas.
       Review points.
       Communication with those charged with governance.


                                    6
                        Implementation Guide to SA 230(Revised 2018)

       Basis for conclusions.
       Reporting & completion.
       Quality/Engagement quality control review.

2.14      In general, a working paper may contain the following:

       Risk and controls relevant to the area.
       Assertions to be tested and satisfied.
       Substantive and analytical procedures performed.
       Persons performing/reviewing the work.
       Dates on which the work was performed/reviewed.
       Extent of review.
       Documents prepared by client.
       Nature, type and size of the entity.
2.15 Audit documentation may be lesser in case of less
complex entities and small entities as compared to large and
complex entities.




                                    7
                                      Chapter 3
                                 FAQs on SA 230

Q1.   What is the scope of SA 230?
A1.   SA 230 deals with the auditor's responsibility to prepare
      audit documentation for an audit of financial statements. It
      is to be adapted as necessary in the circumstances when
      applied to audits of other historical financial information.
      The specific documentation requirements of other SAs do
      not limit the application of SA 230. Laws or regulations
      may establish additional documentation requirements.
Q2.   What is the nature            and    purpose     of   audit
      documentation?
A2.   Audit documentation that meets the requirements of this
      SA and the specific documentation requirements of other
      relevant SAs provides:
      (a)     Evidence of the auditor's basis for a conclusion
              about the achievement of the overall objectives of
              the auditor; and
      (b)     Evidence that the audit was planned and performed
              in accordance with SAs and applicable legal and
              regulatory requirements.
      A table has been given stating the specific documentation
      requirements under various SAs. Refer response to FAQ
      No. 37.
Q3.   What are the purposes which may be served by audit
      documentation?
A3.   Audit documentation serves a number of purposes,
      including the following:
            Assisting the engagement team to plan and perform
            the audit.
                   Implementation Guide to SA 230(Revised 2018)

          Assisting members of the engagement team
          responsible for supervision to direct and supervise the
          audit work, and to discharge their review
          responsibilities in accordance with SA 220.
          Enabling the engagement team to be accountable for
          its work.
          Retaining a record of matters            of   continuing
          significance to future audits.
          Enabling the conduct of quality control reviews and
          inspections in accordance with SQC 1.
          Enabling the conduct of external inspections in
          accordance with applicable legal, regulatory or other
          requirements.
Q4.   What is the objective of the auditor under SA 230?

A4.   The objective of the auditor is to prepare documentation
      that provides:
          A sufficient and appropriate record of the basis for the
          auditor's report; and
          Evidence that the audit was planned and performed in
          accordance with SAs and applicable legal and
          regulatory requirements.

Q5.   What do you mean by audit documentation?
A5.   The record of audit procedures performed, relevant audit
      evidence obtained, and conclusions the auditor reached
      (terms such as "working papers" or "workpapers" are also
      sometimes used). It may be noted, that the `documents
      provided by client' which are used to do audit should be part
      of audit documentation and checking notes should be
      attached by auditors on such documents.
Q6.   What do you mean by audit file?
A6.   One or more files, in physical or electronic form, arranged
      containing the records that comprise the audit
      documentation for a specific engagement.






                                9
Implementation Guide to SA 230(Revised 2018)

Q7.    What do you mean by experienced auditor?
A7.    An individual (whether internal or external to the firm) who
       has practical audit experience, and a reasonable
       understanding of:
           Audit processes;
           SAs and applicable legal and regulatory requirements;
           The business environment in which the entity
           operates; and
           Auditing and financial reporting issues relevant to the
           entity's business.
Q8.    What would be the form, content and extent of Audit
       Documentation?

A8.    The auditor shall prepare audit documentation that is
       sufficient to enable an experienced auditor, to understand:
           The nature, timing, and extent of the audit procedures
           performed to comply with the SAs and applicable legal
           and regulatory requirements;
           The results of the audit procedures performed, and the
           audit evidence obtained; and
           Significant matters arising during the audit, the
           conclusions reached thereon, and significant
           professional judgments made in reaching those
           conclusions.
Q9.    What are influential factors for the form, content and
       extent of audit documentation?

A9.    The form, content and extent of audit documentation
       depend on factors such as:
           The size and complexity of the entity.
           The nature of the audit procedures to be performed.
           The identified risks of material misstatement.
           The significance of the audit evidence obtained.
           The nature and extent of exceptions revealed.


                               10
                    Implementation Guide to SA 230(Revised 2018)

           The need to document a conclusion or the basis for a
           conclusion not readily determinable from the
           documentation of the work performed or audit
           evidence obtained.
           The audit methodology and tools used.
Q10.   How should the audit documentation be recorded?

A10.   Audit documentation may be recorded on paper or on
       electronic or other media.
Q11.   What are the examples of the audit documentation?

A11.   Examples of audit documentation include the following:
           Engagement letter.
           Audit programmes defined, with details of work carried
           out and results filled, including planning memorandum.
           Analyses of various account         balances     through
           comparatives and corroborative.
           Issues memoranda.
           Summaries of significant matters.
           Letters of confirmation and representation.
           Checklists.
           Correspondence       (including   e-mail)     concerning
           significant matters.
           Abstracts or copies of the entity's records/contracts/
           agreements.
       Audit documentation, however, is not a substitute for the
       entity's accounting records and vice versa.
Q12.   Whether Minutes Book, Records, Bills, Vouchers,
       Fixed Assets Register, legal books etc. are to be
       obtained by auditor as audit documentation? What
       would the auditor not include in the audit
       documentation?

A12.   No, such records are to be kept and maintained by the
       management / owner of the entity. Auditor may take

                                11
Implementation Guide to SA 230(Revised 2018)

       abstract of some accounts, records, contracts etc as he
       may find relevant as per his judgement. Further, the
       auditor also need not include in audit documentation:

           Superseded drafts of working papers and financial
           statements;
           Notes that reflect incompleteness;
           Preliminary thinking;
           Previous copies of documents             corrected    for
           typographical or other errors; and
           Duplicates of documents.
       Oral explanations by the auditor, on their own, do not
       represent adequate support for the work auditor performed
       or conclusions the auditor reached, but may be used to
       explain or clarify information contained in the audit
       documentation.
Q13.   Whether confirmation of all parties account balances
       should be obtained by the management and copy of
       all should be recorded by the auditor as audit
       documentation, if not, then to what extent and in which
       manner the confirmation(direct/third party/obtained by
       management/ verification from records) is relevant for
       the audit documentation required to be recorded?

A13.   No, the SAs do not prescribe that the confirmation of all
       account balances are required to be obtained. As it may
       also not be feasible considering the time and cost involved
       and to complete the audit in time. It is the auditor's
       judgment to rely on the running account balances,
       statements, transactions with the parties and behaviour of
       the account. In the cases when the auditor has reason to
       believe that the account balances with the respective
       parties are material and may have material differences, he
       should ask for the confirmations of the balances from the
       respective parties/entities to reduce the risk of material
       misstatement at low level. The confirmations, if available in







                                12
                    Implementation Guide to SA 230(Revised 2018)

       other cases also will further support the auditor's opinion.
       As required by SA 330 and SA 505, the auditor should
       obtain more persuasive audit evidence to respond to the
       auditor's assessment of higher risk. In such situation
       external confirmation is more reliable as an audit evidence.
       Hence when there is higher risk involved the auditor should
       reduce the risk by obtaining the external confirmation.
Q14.   The requirements of the laws and regulations for
       compliances of the disclosure are given in illustrative
       formats and contents of the respective laws and
       regulations. The auditor is required to document all
       matters of non-compliances in material aspects.
       Whether the additional documentation is required?
A14.   The Companies Act, 2013 has given the formats for
       financial statements in Schedule III, with the manner of
       disclosure and items required to be disclosed. For high
       quality of reporting it is always desired that the disclosure
       should be more appropriate. The requirements are meant
       to add value to the users of the financial statements. The
       auditor should therefore document to support the opinion
       where there is any material departure from the requirement
       and which may also materially influence the decision of the
       user.
       Further, in those cases where no specific requirement of
       the format or disclosure is given, the auditor may agree to
       the financial reporting framework being followed by the
       entity and disclosing those items which are pertinent to the
       said framework and the applicable requirement under that
       audit. In such case the auditor should specify the same in
       the engagement letter issued to the auditee. As in case of
       non-corporate entities, the disclosure as required under
       the Companies Act, 2013 is not applicable.
Q15.   What would be the audit documentation in case of
       Smaller / Less Complex Entity?
A15.   The audit documentation for the audit of a smaller/less
       Complex entity is less extensive than that for the audit of a
       larger entity. In certain cases it may materially vary as

                                13
Implementation Guide to SA 230(Revised 2018)

       there may be few documentation in some small/less
       complex entity. Here there may be more personal
       communication and formally there may only be the
       representation letter as audit documentation.
       When preparing audit documentation, the auditor of a
       smaller entity may also find it helpful and efficient to record
       various aspects of the audit together in a single document.
       Examples of matters that may be documented together in
       the audit of a smaller entity include understanding of the
       entity and its internal control, the overall audit strategy and
       audit plan, materiality, determined in accordance with SA
       320, `Materiality in Planning and Performing an Audit',
       assessed risks, significant matters noted during the audit,
       and conclusions reached.
       Application and Other Explanatory Material given in the
       standards on auditing also mention the lesser
       documentation and deals with considerations specific to
       Smaller entities, the brief of which is explained as below
       (for details the auditor may refer the relevant standard):
           SA 260(Revised), "Communication with Those
           Charged with Governance", which explains that in
           some smaller entities, however, one person may be
           charged with governance, for example, the owner-
           manager where there are no other owners, or a sole
           trustee.
           Also, in some cases, the appropriate person(s) with
           whom to communicate may not be clearly identifiable
           from the applicable legal framework or other
           engagement circumstances, for example, entities
           where the governance structure is not formally
           defined, such as some family-owned entities, some
           not-for-profit organizations, and some government
           entities. In such cases, the auditor may need to
           discuss and agree with the engaging party (Auditee)
           the relevant person(s) with whom to communicate.
           SA 265, "Communicating Deficiencies in Internal
           Control to Those Charged with Governance and
           Management", explains that smaller entities may find


                                 14
            Implementation Guide to SA 230(Revised 2018)

   that certain types of control activities are not
   necessary because of controls applied by
   management. For example, management's sole
   authority for granting credit to customers and
   approving significant purchases can provide effective
   control over important account balances and
   transactions, lessening or removing the need for more
   detailed control activities.
   SA 240, "The Auditor's Responsibilities relating to
   Fraud in an Audit of Financial Statements", which
   states that in case of small entity where a single owner
   manages the entity and no one else has governance
   role. In these cases, there is ordinarily no action on
   the part of the auditor because there is no oversight
   separate from the management.
   SA 300, "Planning an Audit of Financial Statements",
   which explains that in audits of small entities, the
   entire audit may be conducted by a very small audit
   team. Many audits of small entities involve the
   engagement partner (who may be a sole practitioner)
   working with one engagement team member (or
   without any engagement team members). With a
   smaller team, co-ordination of, and communication
   between, team members are easier. Establishing the
   overall audit strategy for the audit of a small entity
   need not be a complex or time-consuming exercise; it
   varies according to the size of the entity, the
   complexity of the audit, and the size of the
   engagement team. For example, a brief memorandum
   prepared at the completion of the previous audit,
   based on a review of the working papers and
   highlighting issues identified in the audit just
   completed, updated in the current period based on
   discussions with the owner-manager, can serve as the
   documented audit strategy for the current audit
   engagement if it covers the matters noted in
   paragraph 7 of SA 300.
   SA 315, "Identifying and Assessing the Risks of
   Material Misstatement Through Understanding the


                       15
Implementation Guide to SA 230(Revised 2018)

           Entity and Its Environment", which explains that Many
           small audits are carried out entirely by the
           engagement partner (who may be a sole practitioner).
           In such situations, it is the engagement partner who,
           having personally conducted the planning of the audit,
           would be responsible for considering the susceptibility
           of the entity's financial statements to material
           misstatement due to fraud or error. Further, smaller
           entities may not have interim or monthly financial
           information that can be used for purposes of analytical
           procedures. In these circumstances, the auditor may
           be able to perform very limited procedures.
           SA 320, "Materiality in Planning and Performing an
           Audit", which explains that when an entity's profit
           before tax from continuing operations is consistently
           nominal, as might be the case for an owner-managed
           business where the owner takes much of the profit
           before tax in the form of remuneration, a benchmark
           such as profit before remuneration and tax may be
           more relevant for audit documentation.
           SA 330, "The Auditor's Responses to Assessed
           Risks", explains that in the case of small entities, there
           may not be many control activities that could be
           identified by the auditor, or the extent to which their
           existence or operation have been documented by the
           entity may be limited.
           SA 540, "Auditing Accounting Estimates, Including
           Fair Value Accounting Estimates, and Related
           Disclosures", explains that obtaining understanding of
           estimates for smaller entities is often less complex as
           their business activities are often limited and
           transactions are less complex. Further, often a single
           person, for example the owner-manager, identifies the
           need to make an accounting estimate and the auditor
           may focus inquiries accordingly.
           SA 570(Revised), "Going Concern", explains that in
           many cases, the management of smaller entities may


                                16
         Implementation Guide to SA 230(Revised 2018)

not have prepared a detailed assessment of the
entity's ability to continue as a going concern, but
instead may rely on in-depth knowledge of the
business      and    anticipated  future   prospects.
Nevertheless, in accordance with the requirements of
this SA, the auditor needs to evaluate management's
assessment of the entity's ability to continue as a
going concern.
Further, continued support by owner-managers is
often important to smaller entities' ability to continue
as a going concern. Where a small entity is largely
financed by a loan from the owner-manager, it may be
important that these funds are not withdrawn. For
example, the continuance of a small entity in financial
difficulty may be dependent on the owner-manager
subordinating a loan to the entity in favour of banks or
other creditors, or the owner-manager supporting a
loan for the entity by providing a guarantee with his or
her personal assets as collateral. In such
circumstances, the auditor may obtain appropriate
documentary evidence of the subordination of the
owner-manager's loan or of the guarantee. Where an
entity is dependent on additional support from the
owner-manager, the auditor may evaluate the owner-
manager's ability to meet the obligation under the
support arrangement. In addition, the auditor may
request written confirmation of the terms and
conditions attaching to such support and the owner-
manager's intention or understanding.

Further, in the case of an audit where the engagement
partner performs all the audit work, the documentation
will not include matters that might have to be
documented solely to inform or instruct members of an
engagement team, or to provide evidence of review by
other members of the team (for example, there will be
no matters to document relating to team discussions
or supervision).

                    17
Implementation Guide to SA 230(Revised 2018)

Q16.   If the auditor complies with SA 230, will the result be
       sufficient and appropriate audit documentation?

A16.   In principle, compliance with the requirements of this SA
       will result in the audit documentation being sufficient and
       appropriate in the circumstances. Other SAs contain
       specific documentation requirements that are intended to
       clarify the application of this SA in the particular
       circumstances of those SAs.
Q17.   Do the specific documentation requirements of other
       SAs limit the application of SA 230?

A17.   No, the specific documentation requirements of other SAs
       do not limit the application of this SA.
Q18.   What will be the consequence, if there is no audit
       documentation requirement in any SA?

A18.   The absence of a documentation requirement in any
       particular SA is not intended to suggest that there is no
       documentation that needs to be prepared as a result of
       complying with that SA. Documentation appropriate to the
       circumstance needs to be maintained.
Q19.   Is it necessary for the auditor to document separately
       (as in a checklist, for example) compliance with
       matters for which compliance is demonstrated by
       documents included within the audit file?
A19.   No, audit documentation provides evidence that the audit
       complies with SAs. However, it is neither necessary nor
       practicable for the auditor to document every matter
       considered, or professional judgment made, in an audit.
       Further, it is unnecessary for the auditor to document
       separately (as in a checklist, for example) compliance with
       matters for which compliance is demonstrated by
       documents included within the audit file. For example:
           The existence of an adequately documented audit
           plan demonstrates that the auditor has planned the
           audit.

                               18
                    Implementation Guide to SA 230(Revised 2018)

           The existence of a signed engagement letter in the
           audit file demonstrates that the auditor has agreed the
           terms of the audit engagement with management, or
           where appropriate, those charged with governance.
           An auditor's report containing an appropriately
           qualified opinion demonstrates that the auditor has
           complied with the requirement to express a qualified
           opinion under the circumstances specified in the SAs.
           In relation to requirements that apply generally
           throughout the audit, there may be a number of ways
           in which compliance with them may be demonstrated
           within the audit file:
           o For example, there may be no single way in which
             the    auditor's   professional    skepticism    is
             documented. But the audit documentation may
             nevertheless provide evidence of the auditor's
             exercise of professional skepticism in accordance
             with SAs. Such evidence may include specific
             procedures       performed      to     corroborate
             management's responses to the auditor's inquiries.
           o Similarly, that the engagement partner has taken
             responsibility for the direction, supervision and
             performance of the audit in compliance with the
             SAs may be evidenced in a number of ways within
             the audit documentation. This may include
             documentation of the engagement partner's timely
             involvement in aspects of the audit, such as
             participation in the team discussion required by SA
             315.
Q20.   What are the examples of significant matters?

A20.   Judging the significance of a matter requires an objective
       analysis of the facts and circumstances. Examples of
       significant matters include:

           Matters that give rise to significant risks. As defined in
           SA 315, significant risks mean an identified and
           assessed risk of material misstatement that, in the


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Implementation Guide to SA 230(Revised 2018)

           auditor's   judgment,      requires     special    audit
           consideration.
           Results of audit procedures indicating (a) that the
           financial statements could be materially misstated, or
           (b) a need to revise the auditor's previous assessment
           of the risks of material misstatement and the auditor's
           responses to those risks.
           Circumstances that cause the auditor significant
           difficulty in applying necessary audit procedures.
           Findings that could result in a modification to the audit
           opinion or the inclusion of an Emphasis of Matter
           paragraph in the auditor's report.
Q21.   What are the important factors in determining the
       form, content and extent of audit documentation of
       significant matters?

A21.   An important factor in determining the form, content and
       extent of audit documentation of significant matters is the
       extent of professional judgment exercised in performing
       the work and evaluating the results. Documentation of the
       professional judgments made, where significant, serves to
       explain the auditor's conclusions and to reinforce the
       quality of the judgment. Such matters are of particular
       interest to those responsible for reviewing audit
       documentation, including those carrying out subsequent
       audits, when reviewing matters of continuing significance
       (for example, when performing a retrospective review of
       accounting estimates).
Q22.   Give examples of circumstances in which, it is
       appropriate to prepare audit documentation relating to
       the use of professional judgment?

A22.   Some examples of circumstances in which, it is
       appropriate to prepare audit documentation relating to the
       use of professional judgment include, where the matters
       and judgments are significant:



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             Implementation Guide to SA 230(Revised 2018)

    The rationale for the auditor's conclusion when a
    requirement provides that the auditor `shall consider'
    certain information or factors, and that consideration is
    significant in the context of the particular engagement.
    The basis for the auditor's conclusion on the
    reasonableness of areas of subjective judgments (for
    example, the reasonableness of significant accounting
    estimates).

    The basis for the auditor's conclusions about the
    authenticity of a document when further investigation
    (such as making appropriate use of an expert or of
    confirmation procedures) is undertaken in response to
    conditions identified during the audit that caused the
    auditor to believe that the document may not be
    authentic.
The auditor may consider it helpful to prepare and retain as
part of the audit documentation a summary (sometimes
known as a completion memorandum) that describes the
significant matters identified during the audit and how they
were addressed, or that includes cross-references to other
relevant supporting audit documentation that provides
such information. Such a summary may facilitate effective
and efficient reviews and inspections of the audit
documentation, particularly for large and complex audits.
Further, the preparation of such a summary may assist the
auditor's consideration of the significant matters. It may
also help the auditor to consider whether, in light of the
audit procedures performed and conclusions reached,
there is any individual relevant SA objective that the
auditor cannot achieve that would prevent the auditor from
achieving the overall objectives of the auditor. It is however
to be noted that the audit documentation for use of the
professional judgment will be materially lesser in case of
audit of small entities and where the engagement partner
himself is dealing with the audit of such entities in all
respect.


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Implementation Guide to SA 230(Revised 2018)

Q23.   What should the auditor record in documenting the
       nature, timing and extent of audit procedures
       performed?

A23.   The auditor should record:
           The identifying characteristics of the specific items or
           matters tested;
           Who performed the audit work and the date such work
           was completed; and
           Who reviewed the audit work performed and the date
           and extent of such review.
       SA 220 requires the auditor to review the audit work
       performed through review of the audit documentation. The
       requirement to document who reviewed the audit work
       performed does not imply a need for each specific working
       paper to include evidence of review. The requirement,
       however, means documenting what audit work was
       reviewed, who reviewed such work, and when it was
       reviewed.
Q24.   What purposes do             recording   the    identifying
       characteristics serve?
A24.   Recording the identifying characteristics serves a number
       of purposes. For example, it enables the engagement
       team to be accountable for its work and facilitates the
       investigation of exceptions or inconsistencies. Identifying
       characteristics will vary with the nature of the audit
       procedure and the item or matter tested. For example:

           For a detailed test of entity-generated purchase
           orders, the auditor may identify the documents
           selected for testing by their dates and unique
           purchase order numbers.
           For a procedure requiring selection or review of all
           items over a specific amount from a given population,
           the auditor may record the scope of the procedure and


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                    Implementation Guide to SA 230(Revised 2018)

           identify the population (for example, all journal entries
           over a specified amount from the journal register).
           For a procedure requiring systematic sampling from a
           population of documents, the auditor may identify the
           documents selected by recording their source, the
           starting point and the sampling interval (for example, a
           systematic sample of shipping reports selected from
           the shipping log for the period April 1 to September
           30, starting with report number 12345 and selecting
           every 125th report).
           For a procedure requiring inquiries of specific entity
           personnel, the auditor may record the dates of the
           inquiries and the names and job designations of the
           entity personnel.
           For an observation procedure, the auditor may record
           the process or matter being observed, the relevant
           individuals, their respective responsibilities, and where
           and when the observation was carried out.

Q25.   What all should the auditor document                     for
       communication/discussion with management?

A25.   The auditor shall document discussions of significant
       matters with management, those charged with
       governance, and others, including the nature of the
       significant matters discussed and when and with whom the
       discussions took place. The documentation is not limited to
       records prepared by the auditor but may include other
       appropriate records such as minutes of meetings prepared
       by the entity's personnel and agreed by the auditor. Others
       with whom the auditor may discuss significant matters may
       include other personnel within the entity, and external
       parties, such as persons providing professional advice to
       the entity. The auditor should specifically deal with key
       audit matters documentation as specified in SA 701 and
       other audit conclusion and reporting standards.


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Implementation Guide to SA 230(Revised 2018)

Q26.   What should the auditor document if the auditor
       identified information that is inconsistent with the
       auditor's final conclusion regarding a significant
       matter?

A26.   The auditor shall document how the auditor addressed the
       inconsistency. The requirement to document how the
       auditor addressed inconsistencies in information does not
       imply that the auditor needs to retain documentation that is
       incorrect or superseded.
Q27.   What will the auditor do when it is necessary to depart
       from a relevant requirement in a SA?

A27.   The auditor should document how the alternative audit
       procedures performed achieve the aim of that requirement,
       and the reasons for the departure, if, in exceptional
       circumstances, the auditor judges it necessary to depart
       from a relevant requirement in a SA. The requirements of
       the SAs are designed to enable the auditor to achieve the
       objectives specified in the SAs, and thereby the overall
       objective of the auditor. Accordingly, other than in
       exceptional circumstances, the SAs call for compliance
       with each requirement that is relevant in the circumstances
       of the audit.
Q28.   Under which situation is a documentation requirement
       not necessary?

A28.   The documentation requirement applies only to
       requirements that are relevant in the circumstances. A
       requirement is not relevant only in the cases where:

           The entire SA is not relevant [for example, if an entity
           does not have an internal audit function, nothing in SA
           610(Revised) is relevant]; or

           The requirement is conditional and the condition does
           not exist (for example, the requirement to modify the
           auditor's opinion where there is an inability to obtain


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                    Implementation Guide to SA 230(Revised 2018)

           sufficient appropriate audit evidence, and there is no
           such inability).

Q29.   What will be the audit documentation, if, in exceptional
       circumstances, the auditor performs new or additional
       audit procedures or draws new conclusions after the
       date of the auditor's report?

A29.   The auditor is required to document:

              The circumstances encountered;
              The new or additional audit procedures performed,
              audit evidence obtained, and conclusions reached,
              and their effect on the auditor's report; and
              When and by whom the resulting changes to audit
              documentation were made and reviewed.
Q30.   Give examples of exceptional circumstances ­ Matters
       arising after the Date of the Auditor's Report?

A30.   Examples of exceptional circumstances include facts which
       become known to the auditor after the date of the auditor's
       report but which existed at that date and which, if known at
       that date, might have caused the financial statements to be
       amended or the auditor to modify the opinion in the
       auditor's report. The resulting changes to the audit
       documentation are reviewed in accordance with the review
       responsibilities set out in SA 220, with the engagement
       partner taking final responsibility for the changes.
Q31.   When should the auditor complete the administrative
       process of assembling the final audit file?
A31.   The auditor should complete the administrative process of
       assembling the final audit file on a timely basis after the
       date of the auditor's report. SQC 1 requires firms to
       establish policies and procedures for the timely completion
       of the assembly of audit files. An appropriate time limit
       within which to complete the assembly of the final audit file
       is ordinarily not more than 60 days after the date of the
       auditor's report.

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Implementation Guide to SA 230(Revised 2018)

Q32.   Whether the administrative process of completion of
       the assembly of the final audit file after the date of the
       auditor's report construes as performance of new
       audit procedures or the drawing of new conclusions?
       If not, what are the changes permissible in the audit
       documentation during the final assembly process?
A32.   No, the administrative process of completion of the
       assembly of the final audit file after the date of the auditor's
       report does not construe as performance of new audit
       procedures or the drawing of new conclusions. Changes
       may, however, be made to the audit documentation during
       the final assembly process if they are administrative in
       nature. Examples of such changes include:
           Deleting or discarding superseded documentation.
           Sorting, collating and cross referencing working
           papers.
           Signing off on completion checklists relating to the file
           assembly process.
           Documenting audit evidence that the auditor has
           obtained, discussed, and agreed with the relevant
           members of the engagement team before the date of
           the auditor's report.
Q33.   What is the retention             period    for    the    audit
       documentation?
A33.   The retention period for audit engagements, as per SQC 1,
       ordinarily is no shorter than seven years from the date of
       the auditor's report, or, if later, the date of the group
       auditor's report.
Q34.   What will be the audit documentation in the
       circumstances where the auditor finds it necessary to
       modify existing audit documentation or add new audit
       documentation after the assembly of the final audit file
       has been completed?

A34.   The auditor shall, regardless of the nature of the
       modifications or additions, document:


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                    Implementation Guide to SA 230(Revised 2018)

           The specific reasons for making them; and
           When and by whom they were made and reviewed.
Q35.   Give an example of a circumstance in which the
       auditor may find it necessary to modify existing audit
       documentation or add new audit documentation after
       file assembly has been completed.
A35.   Example is the need to clarify existing audit documentation
       arising from comments received during monitoring
       inspections performed by internal or external parties.
Q36.   Who is the owner of the audit documentation?

A36.   Standard on Quality Control (SQC) 1, "Quality Control for
       Firms that Perform Audits and Reviews of Historical
       Financial Information, and Other Assurance and Related
       Services Engagements", issued by the ICAI, provides that,
       unless otherwise specified by law or regulation, audit
       documentation is the property of the auditor. He may at his
       discretion, make portions of, or extracts from, audit
       documentation available to clients, provided such
       disclosure does not undermine the validity of the work
       performed, or, in the case of assurance engagements, the
       independence of the auditor or of his personnel.
A37.   Provide the specific audit documentation requirements
       in other SAs?
A37.   The specific audit documentation requirements in the
       respective SAs are given below. Since the standards on
       auditing are in alignment of the international standards on
       auditing prepared keeping in mind the requirements of the
       listed entities and public interest entities with a view to
       oversee the public interest, the specific documentation
       requirements have been given accordingly. The same may
       be adjusted (in case of small/ less complex entities as also
       briefed in the application material of the respective
       Standards) according to the requirements based on the
       size, nature, type of the entity being audited and
       complexities involved.

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Implementation Guide to SA 230(Revised 2018)

SA 220, Quality Control for an Audit of Financial Statements

Para
              Issue                 Documentation Needed
Ref.
24.     Compliance with The auditor shall document:
        the      Relevant
                           Issues identified with respect to
        Ethical      and
                           compliance with relevant ethical
        independence
                           requirements and how they were
        Requirements.
                           resolved.
        Acceptance and
                           Confirmation of independence
        Continuance of
                           and documenting the same.
        client
        relationship and  Conclusions on compliance with
        audit              independence requirements that
        engagements.       apply to the audit engagement,
        Consultations.     and any relevant discussions
                           with the firm that support these
                           conclusions.
                                Conclusions reached regarding
                                the acceptance and continuance
                                of client relationships and audit
                                engagements.
                                The nature and scope of, and
                                conclusions    resulting  from,
                                consultations undertaken during
                                the course of the audit
                                engagement.
 25    Engagement         The engagement quality control
       Quality    Control reviewer shall document:
       Review - Timing  The procedures required by the
       and Procedures.       firm's policies on engagement
                             quality control review have been
                             performed;       and     activities
                             performed with respect to this
                             could be documented;



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                     Implementation Guide to SA 230(Revised 2018)

                                 The engagement quality control
                                 review has been completed on
                                 or before the date of the
                                 auditor's report; and
                                 The reviewer is not aware of any
                                 unresolved matters that would
                                 cause the reviewer to believe
                                 that the significant judgments the
                                 engagement team made and the
                                 conclusions they reached were
                                 not appropriate.
A35    Documentation of      Documentation of consultations with
       Consultations         other professionals that involve
                             difficult or contentious matters that is
                             sufficiently complete and detailed
                             contributes to an understanding of:
                                 The issue on which consultation
                                 was sought; and
                                 The results of the consultation,
                                 including any decisions taken,
                                 the basis for those decisions and
                                 how they were implemented.

SA 240, The Auditor's Responsibilities Relating to Fraud in an
Audit of Financial Statements

Para
             Issue                   Documentation Needed
Ref.

 44     Understanding            The      significant    decisions
        the entity & its         reached during the discussion
        environment              among the engagement team
                                 regarding the susceptibility of the
        Assessment     of        entity's financial statements to
        risks of material        material misstatement due to
        misstatements            fraud; and


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Implementation Guide to SA 230(Revised 2018)

                               The identified and assessed
                               risks of material misstatement
                               due to fraud at the financial
                               statement level and at the
                               assertion level.

 45   Responses to              The overall responses to the
      assessed risks            assessed risks of material
                                misstatement due to fraud at the
                                financial statement level and the
                                nature, timing and extent of audit
                                procedures, and the linkage of
                                those procedures with the
                                assessed risks of material
                                misstatement due to fraud at the
                                assertion level; and

                                The results of the audit
                                procedures, including those
                                designed to address the risk of
                                management      override     of
                                controls.

 46   Communications        Communications about fraud made
      about fraud           to management, those charged with
                            governance, regulators and others.

 47   Fraud in revenue      Reasons      for    concluding    the
      recognition           presumption that there is a risk of
                            material misstatement due to fraud
                            related to revenue recognition is not
                            applicable in the circumstances of
                            the     engagement,      or   checks
                            performed and found satisfactory
                            with reference to the procedures.




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                     Implementation Guide to SA 230(Revised 2018)

SA 250, Consideration of Laws and Regulations in an Audit of
Financial Statements
Para
             Issue                   Documentation Needed
Ref
 29       Non              -     Identified or suspected         non-
          compliance             compliance with laws             and
          Discussions            regulations.
                                 Results of discussions with :
                                      Management;
                                      those       charged     with
                                      governance            (where
                                      applicable); and
                                      other parties   outside     the
                                      entity.
A21    Non compliance            Documentation may include:
                                      Copies   of     records      or
                                      documents.
                                      Minutes of discussions held
                                      with management, those
                                      charged with governance or
                                      parties outside the entity.

SA 260(Revised), Communication with Those Charged with
Governance

Para         Issue                   Documentation Needed
Ref
23     Oral   &    written       Matters required by this SA to
       communications to         be       communicated      are
       those charged with        communicated orally, document
       governance                following aspects:
                                      The matter;
                                      When communication was
                                      made; and


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Implementation Guide to SA 230(Revised 2018)

                                      To whom      communication
                                      was made.
                                 Matters required by this SA to
                                 be      communicated        are
                                 communicated in writing, retain
                                 a copy of the communication.
A54    Oral communication    May include a copy of minutes
                             prepared by entity retained as part
                             of audit documentation where those
                             minutes are an appropriate record
                             of the communication.

SA 265, Communicating Deficiencies in Internal Control to
Those Charged with Governance and Management

Para          Issue                  Documentation Needed
Ref
A13    Written                   Receipt of such communication.
       communication of          Documentation        of  written
       significant               communication      of significant
       deficiencies              deficiencies.

SA 300, Planning an Audit of Financial Statements
Para
             Issue                   Documentation Needed
Ref
11     Planning                  The overall audit strategy;
                                 The audit plan; and
                                 Any significant changes made
                                 during the audit engagement to
                                 the overall audit strategy or the
                                 audit plan, and the reasons for
                                 such changes.
A17-      Overall      audit     In respect of overall         audit
A20       strategy               strategy, document:
          Audit plan                  the key decisions considered

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            Implementation Guide to SA 230(Revised 2018)

   Significant                necessary to properly plan
   changes made               the audit ­ scope, timing,
   in the above two           conduct of audit; and
                              communicate      significant
                              matters communicated to the
                              engagement team.
                          May summarize the overall audit
                          strategy in the form of a
                          memorandum.
                          Documentation of the audit plan
                          is record of planned nature,
                          timing and extent of risk
                          assessment procedures and
                          further audit procedures at the
                          assertion level in response to the
                          assessed risks.
                          May    use    standard        audit
                          programs      and/or          audit
                          completion checklists, tailored as
                          needed to reflect the particular
                          engagement circumstances.
                          A record of the significant
                          changes to the overall audit
                          strategy and the audit plan
                          should document:
                              resulting changes to the
                              planned nature, timing and
                              extent of audit procedures.
                              reasons   for   significant
                              changes were made.
                              overall strategy and audit
                              plan finally adopted for the
                              audit.
                              Response to the significant
                              changes occurring during the
                              audit.


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Implementation Guide to SA 230(Revised 2018)

                                  In smaller entities a suitable,
                                  brief memorandum may serve as
                                  the documented strategy for the
                                  audit of a smaller entity.

SA 315, Identifying and Assessing the Risks of Material
Misstatement Through Understanding the Entity and Its
Environment
Para
             Issue                    Documentation Needed
 Ref
32(a) Discussion among            The discussion among the
      the engagement              engagement       team     where
      Team                        required by paragraph 10 of SA
                                  315,    and    the    significant
                                  decisions reached:
                                       the susceptibility of the
                                       entity's financial statements
                                       to material misstatement;
                                       and
                                       the application of the
                                       applicable financial reporting
                                       framework to the entity's
                                       facts and circumstances.
32(b) Understanding of            Relevant industry, regulatory,
      each of the aspects         and other external factors
      of the entity and its       including the applicable financial
      environment                 reporting framework.
      specified in                The nature        of   the   entity,
      paragraph 11                including:
                                       its operations;
                                       its    ownership       and
                                       governance structures;
                                       the types of investments that
                                       the entity is making and
                                       plans to make, including


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                   Implementation Guide to SA 230(Revised 2018)

                                     investments     in    special
                                     purpose entities; and
                                     the way that the entity is
                                     structured and how it is
                                     financed.
                                 Accounting policies selection
                                 and application of accounting
                                 policies, including the reasons
                                 for changes thereto.
                                 Auditor's evaluation of whether
                                 the entity's accounting policies
                                 are appropriate for its business
                                 and     consistent    with   the
                                 applicable financial reporting
                                 framework     and     accounting
                                 policies used in the relevant
                                 industry.
                                 The entity's objectives and
                                 strategies, and those related
                                 business risks that may result in
                                 risks of material misstatement.
                                 The measurement and review of
                                 the      entity's    financial
                                 performance.
32(b) Understanding of           Control environment ­ Auditor's
      each of the internal       evaluation of whether:
      control components             Management,        with the
      specified in                   oversight of those charged
      paragraphs 14-24               with     governance,    has
                                     created and maintained a
                                     culture of honesty and
                                     ethical behaviour;
                                     The strengths in the control
                                     environment        elements
                                     collectively  provide    an
                                     appropriate foundation for

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Implementation Guide to SA 230(Revised 2018)

                                    the other components of
                                    internal control; and
                                    Whether        those    other
                                    components         are    not
                                    undermined by deficiencies
                                    in the control environment.
                                Entity's risk assessment process
                                for :
                                    Identifying business risks
                                    relevant      to      financial
                                    reporting objectives;
                                    Estimating the significance
                                    of the risks;
                                    Assessing the likelihood of
                                    their occurrence; and
                                    Deciding about actions to
                                    address those risks.
                                Management's failure to identify
                                a risk otherwise expected to
                                have been identified:
                                    Why that process failed to
                                    identify it; and
                                    Evaluation of whether the
                                    process is appropriate to its
                                    circumstances or determine
                                    whether it      represent a
                                    significant   deficiency   in
                                    internal control with regard
                                    to      the   entity's   risk
                                    assessment process.
                                If the entity has not established
                                such a process or has an ad hoc
                                process:
                                    Discussion              with
                                    management        regarding
                                    whether    business    risks

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Implementation Guide to SA 230(Revised 2018)

                relevant      to     financial
                reporting objectives have
                been identified and how they
                have been addressed.
                Information           system,
                including      the     related
                business           processes,
                relevant      to     financial
                reporting,   including     the
                following areas:
                 The        classes      of
                 transactions     in   the
                 entity's operations that
                 are significant to the
                 financial statements;
                 The procedures, within
                 both          information
                 technology     (IT)  and
                 manual systems, by
                 which those transactions
                 are initiated, recorded,
                 processed, corrected as
                 necessary, transferred to
                 the general ledger and
                 reported in the financial
                 statements;
                 The related accounting
                 records,         supporting
                 information and specific
                 accounts in the financial
                 statements that are used
                 to     initiate,     record,
                 process       and     report
                 transactions;           this
                 includes the correction of
                 incorrect information and
                 how      information       is
                 transferred       to     the
                 general      ledger.    The


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Implementation Guide to SA 230(Revised 2018)

                                       records may be in either
                                       manual or electronic
                                       form;
                                     How the information
                                     system captures events
                                     and conditions, other
                                     than transactions, that
                                     are significant to the
                                     financial statements;
                                     The financial reporting
                                     process used to prepare
                                     the     entity's financial
                                     statements,       including
                                     significant     accounting
                                     estimates              and
                                     disclosures; and
                                     Controls      surrounding
                                     journal entries, including
                                     non-standard       journal
                                     entries used to record
                                     non-recurring, unusual
                                     transactions            or
                                     adjustments.
                                Entity's     communication    of
                                financial reporting roles and
                                responsibilities and significant
                                matters relating to financial
                                reporting, including:
                                    Communications  between
                                    management and those
                                    charged with governance;
                                    and
                                    External    communications,
                                    such     as    those    with
                                    regulatory authorities.
                                Control activities relevant to the
                                audit:


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Implementation Guide to SA 230(Revised 2018)

                 Understanding of control
                 activities relevant to the
                 audit; and
                 Entity's response IT risks.
             Monitoring of controls:
                 Understanding of entity's
                 major activities to monitor
                 internal control over financial
                 reporting; and
                 How the entity initiates
                 remedial       actions        to
                 deficiencies in its controls.
             Understanding of the relevance
             of the Internal Audit Function:
                 The nature of the internal
                 audit               function's
                 responsibilities and how the
                 internal audit function fits in
                 the entity's organisational
                 structure; and
                 The activities performed, or
                 to be performed, by the
                 internal audit function.
             Entities having uncomplicated
             businesses    and     processes
             relevant to financial reporting,
             documentation:
                 Simple and brief.
                 Not necessary to document
                 the entirety of the auditor's
                 understanding of the entity
                 and matters related to it.
                 Document       only     key
                 elements of understanding.
                 Extent    of   documentation

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Implementation Guide to SA 230(Revised 2018)

                                    may     also  reflect   the
                                    experience and capabilities
                                    of the members of the audit
                                    engagement team.
                                    For recurring audits, certain
                                    documentation     may     be
                                    carried forward, updated as
                                    necessary to reflect changes
                                    in the entity's business or
                                    processes.
32(b) Sources           of      Sources of the information used
      information   from        in the entity's monitoring
      which           the       activities.
      understanding was         Basis upon which management
      obtained and Risk         considers the information to be
      assessment                sufficiently reliable for the
      procedures                purpose.
      performed
                                Documentation      about   Risk
                                assessment           procedures
                                performed.
32(c)   Risks of material       Risks of material misstatement
        misstatement    (in     identified and assessed:
        terms of para 25 of        at the financial statement
        the standard)              level; and
                                   at the assertion level for
                                   classes of transactions,
                                   account      balances and
                                   disclosures.
32(d) Risks       requiring The risks identified, and related
      special        audit controls about which the auditor has
      considerations        obtained an understanding, as a
                            result of the requirements in
                            paragraphs 27-30 of the Standard.









                              40
                    Implementation Guide to SA 230(Revised 2018)

SA 320, Materiality in Planning and Performing an Audit

 Para
        Issue                 Documentation Needed
 Ref.

14(a)   Materiality for the      Materiality for the financial
& (b)   financial                statements as a whole:
        statements as a
                                      For establishing the overall
        whole or
                                      audit strategy.
        materiality
        level(s) for             Materiality level(s) for particular
        particular classes       classes of transactions, account
        of transactions,         balances or disclosures:
        account balances              Determine materiality level(s)
        or disclosures                to be applied to particular
                                      classes    of    transactions,
                                      account       balances      or
                                      disclosures, which could
                                      expected to influence the
                                      economic decisions of the
                                      users.
14(c)   Performance              Determine             performance
        materiality              materiality:
                                      For assessing the risks of
                                      material misstatement; and
                                      Determining    the   nature,
                                      timing and extent of further
                                      audit procedures.
14(d)   Revisions as the         Revise     materiality for    the
        Audit Progresses         financial statements as a whole
                                 or    materiality    level(s)  for
                                 particular        classes       of
                                 transactions, account balances
                                 or disclosures:
                                      Aware of information during
                                      the audit that would have


                                 41
Implementation Guide to SA 230(Revised 2018)

                                     caused the auditor to have
                                     determined    a     different
                                     amount (or amounts) initially.
                               If the auditor concludes that a
                               lower materiality than that initially
                               determined is appropriate:
                                     Determine whether it is
                                     necessary     to       revise
                                     performance materiality, and
                                     Whether the nature, timing
                                     and extent of the further audit
                                     procedures              remain
                                     appropriate.

SA 330, The Auditor's Responses to Assessed Risks

Para
              Issue                 Documentation Needed
Ref

28(a)   Overall responses   Overall responses to address the
                            assessed     risks     of     material
                            misstatement at the financial
                            statement level, and the nature,
                            timing and extent of the further audit
                            procedures performed.

28(b)   Linkages            Linkage of those procedures with
                            the assessed risks at the assertion
                            level.

28(c)   Results                 The results of the audit
& A63                           procedures,      including  the
                                conclusions where these are not
                                otherwise clear.
                                     The form and extent of audit
                                     documentation is a matter of
                                     professional judgment, and

                               42
                      Implementation Guide to SA 230(Revised 2018)

                                       is influenced by:
                                        nature,       size     and
                                        complexity of the entity
                                        and its internal control;
                                        availability of information;
                                        and
                                        audit methodology and
                                        technology used in the
                                        audit.

 29     Operating                 Document      the  conclusions
        effectiveness of          reached about relying on such
        controls obtained         controls that were tested in a
        in previous audits        previous audit.

 30                               The auditors' documentation
                                  shall demonstrate that the
                                  financial statements agree or
                                  reconcile with the underlying
                                  accounting records.

SA 450, Evaluation of Misstatements Identified during the
Audit

Para
              Issue                   Documentation Needed
Ref.

15 &   Uncorrected             The    amount     below      which
A25    Misstatements           misstatements       would       be
                               regarded as clearly trivial.
                               All misstatements accumulated
                               during the audit and whether they
                               have been corrected:
                                  Communication         with
                                  management to correct the
                                  misstatement.



                                 43
Implementation Guide to SA 230(Revised 2018)

                                Communication with those
                                charged with governance:
                                     Uncorrected
                                     misstatements; and
                                     Effect that they, individually
                                     or in aggregate, may have
                                     on the opinion in the
                                     auditor's report.
                                The auditor's conclusion as to
                                whether               uncorrected
                                misstatements are material,
                                individually or in aggregate, and
                                the basis for that conclusion.
                                Auditor should consider:
                                The size and nature of the
                                misstatements, both in relation
                                to    particular  classes     of
                                transactions,          account
                                balances or disclosures and
                                the financial statements as a
                                whole, and the particular
                                circumstances       of    their
                                occurrence; and
                                The effect of uncorrected
                                misstatements related to prior
                                periods on the relevant
                                classes     of     transactions,
                                account        balances       or
                                disclosures, and the financial
                                statements as a whole.
                             The auditor's documentation of
                             uncorrected misstatements may
                             take into account:
                                The consideration of the
                                aggregate       effect     of
                                uncorrected misstatements;


                               44
                   Implementation Guide to SA 230(Revised 2018)

                                 The evaluation of whether the
                                 materiality level or levels for
                                 particular      classes       of
                                 transactions,           account
                                 balances or disclosures, if any,
                                 have been exceeded; and
                                 The evaluation of the effect of
                                 uncorrected misstatements on
                                 key ratios or trends, and
                                 compliance      with     legal,
                                 regulatory and contractual
                                 requirements (for example,
                                 debt covenants).


SA 540, Auditing Accounting Estimates, Including Fair Value
Accounting Estimates, and Related Disclosures
Para
              Issue                  Documentation Needed
Ref

23(a) Auditor's conclusion       The basis for the auditor's
                                 conclusions         about        the
                                 reasonableness of accounting
                                 estimates and their disclosure
                                 that give rise to significant risks.
23(b) Management bias            Indicators   of        possible
 and                             management bias, if any.
A128
                                      Assists the auditor in
                                      concluding     whether  the
                                      auditor's risk assessment
                                      and     related   responses
                                      remain appropriate, and
                                      Evaluating    whether   the
                                      financial statements as a
                                      whole are free from material
                                      misstatement.



                                45
Implementation Guide to SA 230(Revised 2018)

SA 550, Related Parties
Para
              Issue                  Documentation Needed
Ref
 28    Related parties           Names of the identified related
                                 parties.
                                 Nature of the related party
                                 relationships.

SA 570(Revised), Going Concern
Para
              Issue                  Documentation Needed
Ref
 17    Auditor's                 Evaluate    whether    sufficient
       Conclusion                appropriate audit evidence has
                                 been obtained.
                                 Conclude         on         the
                                 appropriateness               of
                                 management's use of the going
                                 concern basis of accounting in
                                 the preparation of the financial
                                 statements.
18.    Whether, in the           Appropriate        documentation
       auditor's judgment,       required       about     material
       a material                uncertainty exists when the
       uncertainty exists        magnitude of its potential impact
                                 and likelihood of occurrence is
                                 such that disclosure of the
                                 nature and implications of the
                                 uncertainty is necessary for:
                                 In the case of            a fair
                                 presentation            financial
                                 reporting framework,     the fair
                                 presentation of the     financial
                                 statements; or
                                 In the case of a compliance
                                 framework,    the  financial
                                 statements   not   to    be
                                 misleading.


                                46
                     Implementation Guide to SA 230(Revised 2018)

SA 600, Using the Work of Another Auditor
Para
            Issue                 Documentation Needed
Ref
 18    Components             Components     whose     financial
       and component          information was audited by other
       auditors               auditors.
                              Such components' significance to
                              the financial information of the entity
                              as a whole.
                              Names of the other auditors.
                              Any conclusions reached that
                              individual components are not
                              material.
                              Procedures performed        and    the
                              conclusions reached.
                              Where component auditor's report is
                              other than unmodified, document
                              how principal auditor has dealt with
                              the qualifications or       adverse
                              remarks contained in the other
                              auditor's report in framing his own
                              report.

SA 610(Revised), Using the Work of Internal Auditors
Para
             Issue                   Documentation Needed
Ref.
 36    External auditor        The evaluation of:
       using the work of         Whether       the       function's
       the internal              organizational     status     and
       auditors                  relevant       policies       and
                                 procedures            adequately
                                 support the objectivity of the
                                 internal auditors;
                                 The level of competence of the
                                 function; and


                                47
Implementation Guide to SA 230(Revised 2018)

                                Whether the function applies a
                                systematic and disciplined
                                approach, including quality
                                control;
                             The nature and extent of the work
                             used and the basis for that
                             decision; and
                             The audit procedures performed
                             by the external auditor to
                             evaluate the adequacy of the
                             work used.
 37    External auditor      The evaluation of the existence
       uses internal         and significance of threats to the
       auditor to provide    objectivity of the internal auditors,
       direct assistance     and the level of competence of
                             the internal auditors used to
                             provide direct assistance;
                             The basis for the decision
                             regarding the nature and extent
                             of the work performed by the
                             internal auditors;
                             Who     reviewed    the    work
                             performed and the date and
                             extent   of   that  review   in
                             accordance with SA 230;
                             The written agreements obtained
                             from an authorized representative
                             of the entity and the internal
                             auditors under paragraph 33 of
                             this SA; and
                             The working papers prepared by
                             the internal auditors who provided
                             direct assistance on the audit
                             engagement.




                              48
                     Implementation Guide to SA 230(Revised 2018)

SA 701, Communicating Key Audit Matters in the Independent
Auditor's Report

Para
             Issue                  Documentation Needed
Ref.

 18    Documentation:       Audit documentation shall include:
       Key audit matters        The     matters     that    required
                                significant auditor attention; and
                                Rationale for the auditor's
                                determination as to whether or
                                not each of these matters is a key
                                audit matter.
                                The rationale for the auditor's
                                determination that there are no
                                key audit matters to communicate
                                in the auditor's report.
                                The rationale for the auditor's
                                determination        not      to
                                communicate in the auditor's
                                report a matter determined to be
                                a key audit matter.
A64    Documentation:
                                Basis of determination of the
       Key Audit Matters
                                matters that required significant
                                auditor attention, from the matters
                                communicated          with   those
                                charged with governance.
                                The auditor's judgments to be
                                supported by the documentation
                                of the auditor's communications
                                with    those      charged  with
                                governance      and    the audit
                                documentation relating to each
                                individual matter.




                               49
Implementation Guide to SA 230(Revised 2018)

SA 720(Revised), The Auditor's Responsibilities Relating to
Other Information

Para
              Issue                  Documentation Needed
Ref.

 25     Documentation       Audit documentation shall include :
        relating to Other      Documentation of the procedures
        Information            performed under this SA.
                               The final version of the other
                               information on which the auditor
                               has performed the work.




                                50
                                                Chapter 4
                                                Checklist

S.No.               Particulars                Yes/No/   Remarks/
                                                 NA       WP Ref

   1.   Whether the audit documentation
        is prepared on a timely basis?

   2.   Whether the audit documentation
        is sufficient to enable an
        experienced auditor, having no
        previous connection with the audit,
        to understand the following?
        (a) The nature, timing, and extent
            of the audit procedures
            performed to comply with the
            SAs and applicable legal and
            regulatory requirements;
        (b) The results of the audit
            procedures performed, and
            the audit evidence obtained;
            and
        (c) Significant matters arising
            during     the   audit,  the
            conclusions reached thereon,
            and significant professional
            judgments made in reaching
            those conclusions.
   3.   While documenting the nature,
        timing and extent of audit
        procedures performed, whether
        the following was recorded

        (a) The identifying characteristics
            of the specific items or matters
Implementation Guide to SA 230(Revised 2018)

            tested;

        (b) Who performed the audit work
            and the date such work was
            completed; and
        (c) Who reviewed the audit work
            performed and the date and
            extent of such review.

   4.   Whether the document includes
        discussions of significant matters
        with management, those charged
        with governance, and others,
        including the nature of the
        significant matters discussed and
        when and with whom the
        discussions took place.

   5.   Where it is identified that
        information is inconsistent with the
        auditor's final conclusion regarding
        a significant matter, whether it is
        documented as to how the
        inconsistency was addressed?

   6.   Where it is considered necessary
        in exceptional circumstances to
        depart from a relevant requirement
        in a SA, whether the audit
        document     reflects   how    the
        alternative    audit    procedures
        performed achieved the aim of that
        requirement and the reasons for
        the departure.

   7.   Where         in      exceptional
        circumstances, new or additional
        audit procedures are performed or
        new conclusions are reached after


                                52
                 Implementation Guide to SA 230(Revised 2018)

     the date of the audit report,
     whether  the  following were
     documented?
     (a) The              circumstances
         encountered;
     (b) The new or additional audit
         procedures performed, audit
         evidence     obtained,     and
         conclusions reached, and their
         effect on the auditor's report;
         and
     (c) When and by whom the
         resulting changes to audit
         documentation were made
         and reviewed.

8.   Is it ensured that after the
     assembly of the final audit file has
     been completed, no deletion or
     discard of audit documentation of
     any nature has taken place before
     the end of its retention period?

9.   Where it is necessary to modify
     existing audit documentation or
     add new audit documentation after
     the assembly of the final audit file
     has been completed, whether the
     following were documented?
     (a) The specific reasons         for
         making them; and
     (b) When and by whom they were
         made and reviewed.




                             53
Implementation Guide to SA 230(Revised 2018)


                                               Appendix

            Illustrative Working Paper Format
 XYZ Limited                          Audit Firms name

 Nature of Assignment                 Article Assistants name

 HO/Unit:

 For the period___                    Date of audit

                                      Reviewed by:



 Area:

 Sub-area:

 Balance as per Balance Sheet:

 Balance as per General Ledger:

 Difference:

 Reason for difference if any:

 Checking Notes:

 Observations:

 Conclusions:




                                 54

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