SA 230 Audit Documentation

SA 230*
Audit Documentation
(Effective for audits of financial statements for periods
beginning on or after April 1, 2009)

Contents
Paragraph(s)
Introduction
Scope of this SA .................................................................................... 1-3
Effective Date ........................................................................................... 4
Objective ................................................................................................. 5
Definitions ............................................................................................... 6
Requirements
Timely Preparation of Audit Documentation ............................................. 7
Documentation of the Audit Procedures Performed
and Audit Evidence Obtained ............................................................. 8-13
Assembly of the Final Audit File ......................................................... 14-16
Application and Other Explanatory Material
Timely Preparation of Audit Documentation .......................................... A1
Documentation of the Audit Procedures Performed
and Audit Evidence Obtained ........................................................ A2-A20
Assembly of the Final Audit File .................................................... A21-A24
Ownership of Audit Documentation ...................................................... A25
Material Modifications to ISA 230, “Audit Documentation”

Standard on Auditing (SA) 230, “Audit Documentation” should be read in
the context of the “Preface to the Standards on Quality Control, Auditing,
Review, Other Assurance and Related Services”, which sets out the
authority of SAs and SA 200, “Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with Standards on
Auditing”.

* Published in January, 2009 issue of the Journal.
Handbook of Auditing Pronouncements-I.A

Introduction
Scope of this SA
1. This Standard on Auditing (SA) 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 this SA. Laws or regulations may establish
additional documentation requirements.
Nature and Purposes of Audit Documentation
2. 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.
3. Audit documentation serves a number of additional purposes,
including the following:
 Assisting the engagement team to plan and perform the audit.
 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 1.
 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 2.
 Enabling the conduct of external inspections in accordance with
applicable legal, regulatory or other requirements.

1 SA 220, “Quality Control for an Audit of Financial Statements”, paragraph 15-17.
2 SQC 1, “Quality Control for Firms that Perform Audits and Reviews of Historical Financial
Information, and Other Assurance and Related Services Engagements”, paragraphs 46, 60, 63, 65
and 85.

SA 230 2
Effective Date
4. This SA is effective for audits of financial statements for periods beginning
on or after April 1, 2009.
Objective
5. The objective of the auditor is to prepare documentation that provides:
(a) A sufficient and appropriate record of the basis for the auditor’s report; and
(b) Evidence that the audit was planned and performed in accordance with SAs
and applicable legal and regulatory requirements.
Definitions
6. For purposes of the SAs, the following terms have the meanings attributed
below:
(a) Audit documentation – 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).
(b) Audit file – One or more folders or other storage media, in physical or
electronic form, containing the records that comprise the audit
documentation for a specific engagement.
(c) Experienced auditor – An individual (whether internal or external to the firm)
who has practical audit experience, and a reasonable understanding of:
(i) Audit processes;
(ii) SAs and applicable legal and regulatory requirements;
(iii) The business environment in which the entity operates; and
(iv) Auditing and financial reporting issues relevant to the entity’s industry.
Requirements
Timely Preparation of Audit Documentation
7. The auditor shall prepare audit documentation on a timely basis. (Ref:
Para. A1)
Documentation of the Audit Procedures Performed and Audit
Evidence Obtained
Form, Content and Extent of Audit Documentation
8. The auditor shall prepare audit documentation that is sufficient to enable
an experienced auditor, having no previous connection with the audit, to

3 SA 230
Handbook of Auditing Pronouncements-I.A

understand: (Ref: Para. A2-A5, A16- A17)
(a) The nature, timing, and extent of the audit procedures performed to comply
with the SAs and applicable legal and regulatory requirements; (Ref: Para.
A6-A7)
(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. (Ref: Para. A8- A11)
9. In documenting the nature, timing and extent of audit procedures
performed, the auditor shall record:
(a) The identifying characteristics of the specific items or matters tested; (Ref:
Para. A12)
(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. (Ref: Para. A13)
10. 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. (Ref: Para. A14)
11. If the auditor identified information that is inconsistent with the auditor’s
final conclusion regarding a significant matter, the auditor shall document how
the auditor addressed the inconsistency. (Ref: Para. A15)
Departure from a Relevant Requirement
12. If, in exceptional circumstances, the auditor judges it necessary to depart
from a relevant requirement in a SA, the auditor shall document how the
alternative audit procedures performed achieve the aim of that requirement, and
the reasons for the departure. (Ref: Para. A18-A19)
Matters Arising after the Date of the Auditor’s Report
13. If, in exceptional circumstances, the auditor performs new or additional
audit procedures or draws new conclusions after the date of the auditor’s report,
the auditor shall document: (Ref: Para. A20)

SA 230 4
(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.
Assembly of the Final Audit File
14. The auditor shall assemble the audit documentation in an audit file and
complete the administrative process of assembling the final audit file on a timely
basis after the date of the auditor’s report. (Ref: Para. A21-A22)
15. After the assembly of the final audit file has been completed, the auditor
shall not delete or discard audit documentation of any nature before the end of its
retention period. (Ref: Para. A23)
16. In circumstances other than those envisaged in paragraph 13 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,
the auditor shall, regardless of the nature of the modifications or additions,
document: (Ref: Para. A24 -A25)
(a) The specific reasons for making them; and
(b) When and by whom they were made and reviewed.
***
Application and Other Explanatory Material
Timely Preparation of Audit Documentation (Ref: Para. 7)
A1. Preparing sufficient and appropriate audit documentation on a timely basis
helps to enhance the quality of the audit and facilitates the effective review and
evaluation of the audit evidence obtained and conclusions reached before the
auditor’s report is finalised. Documentation prepared after the audit work has
been performed is likely to be less accurate than documentation prepared at the
time such work is performed.
Documentation of the Audit Procedures Performed and Audit
Evidence Obtained
Form, Content and Extent of Audit Documentation (Ref: Para. 8)
A2. The form, content and extent of audit documentation depend on factors
such as:

5 SA 230
Handbook of Auditing Pronouncements-I.A

 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 identified.
 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.
A3. Audit documentation may be recorded on paper or on electronic or other
media. Examples of audit documentation include:
 Audit programmes.
 Analyses.
 Issues memoranda.
 Summaries of significant matters.
 Letters of confirmation and representation.
 Checklists.
 Correspondence (including e-mail) concerning significant matters.
The auditor may include abstracts or copies of the entity’s records (for example,
significant and specific contracts and agreements) as part of audit
documentation. Audit documentation, however, is not a substitute for the entity’s
accounting records.
A4. The auditor need not include in audit documentation superseded drafts of
working papers and financial statements, notes that reflect incomplete or
preliminary thinking, previous copies of documents corrected for typographical or
other errors, and duplicates of documents.
A5. 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.
Documentation of Compliance with SAs (Ref: Para. 8(a))
A6. 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

SA 230 6
application of this SA in the particular circumstances of those SAs. The specific
documentation requirements of other SAs do not limit the application of this SA.
Furthermore, the absence of a documentation requirement in any particular SA is
not intended to suggest that there is no documentation that will be prepared as a
result of complying with that SA.
A7. 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.
 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:
 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.
 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 3153.

3 SA 315, “Identifying and Assessing the Risks of Material Misstatement Through Understanding the

Entity and Its Environment”, paragraph 10.

7 SA 230
Handbook of Auditing Pronouncements-I.A

Documentation of Significant Matters and Related Significant Professional
Judgments (Ref: Para. 8(c))
A8. 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)4.
 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.
A9. 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).
A10. Some examples of circumstances in which, in accordance with paragraph
8, it is appropriate to prepare audit documentation relating to the use of
professional judgment include, where the matters and judgments are significant:
 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

4 SA 315, paragraph 4(e).

SA 230 8
 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.
 When SA 701 applies5, the auditor’s determination of the key audit matters
or the determination that there are no key audit matters to be
communicated.
A11. 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.
Identification of Specific Items or Matters Tested, and of the Preparer and
Reviewer (Ref: Para. 9)
A12. 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 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

5 SA 701, Communicating Key Audit Matters in the Independent Auditor’s Report.

9 SA 230
Handbook of Auditing Pronouncements-I.A

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.
A13. SA 2206 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.
Documentation of Discussions of Significant Matters with Management, Those
Charged with Governance, and Others (Ref: Para. 10)
A14. 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.
Documentation of How Inconsistencies have been addressed (Ref: Para. 11)
A15. 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.
Considerations Specific to Smaller Entities (Ref: Para. 8)
A16. The audit documentation for the audit of a smaller entity is generally less
extensive than that for the audit of a larger entity. 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). Nevertheless, the engagement
partner complies with the overriding requirement in paragraph 8 to prepare audit
documentation that can be understood by an experienced auditor, as the audit

6 SA 220, paragraph 17.

SA 230 10
documentation may be subject to review by external parties for regulatory or
other purposes.
A17. 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, with cross references to supporting working papers as
appropriate. Examples of matters that may be documented together in the audit
of a smaller entity include the understanding of the entity and its internal control,
the overall audit strategy and audit plan, materiality, determined in accordance
with SA 3207, assessed risks, significant matters noted during the audit, and
conclusions reached.
Departure from a Relevant Requirement (Ref: Para. 12)
A18. The requirements of the SAs are designed to enable the auditor to achieve
the objectives specified in the SAs, and thereby the overall objectives 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.
A19. The documentation requirement applies only to requirements that are
relevant in the circumstances. A requirement is not relevant8 only in the cases
where:
(a) The entire SA is not relevant [for example, if an entity does not have an
internal audit function, nothing in SA 610(Revised)9 is relevant]; or
(b) 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 sufficient appropriate audit evidence, and there is no
such inability).
Matters Arising after the Date of the Auditor’s Report (Ref: Para. 13)
A20. 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.10 The
resulting changes to the audit documentation are reviewed in accordance with

7 SA 320, “Materiality in Planning and Performing an Audit”.
8 Refer paragraph 22 of SA 200.
9 SA 610(Revised), “Using the Work of Internal Auditors.
10 SA 560, “Subsequent Events”, paragraph 13.

11 SA 230
Handbook of Auditing Pronouncements-I.A

the review responsibilities set out in SA 22011, with the engagement partner
taking final responsibility for the changes.
Assembly of the Final Audit File (Ref: Para. 14-16)
A21. SQC 1 requires firms to establish policies and procedures for the timely
completion of the assembly of audit files.12 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.13
A22. The completion of the assembly of the final audit file after the date of the
auditor’s report is an administrative process that does not involve the 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.
A23. SQC 1 requires firms to establish policies and procedures for the retention
of engagement documentation.14 The retention period for audit engagements
ordinarily is no shorter than seven years15 from the date of the auditor’s report,
or, if later, the date of the group auditor’s report.16
A24. 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

11 SA 220, paragraph 16.
12 Refer para 74 of SQC 1.
13 Refer para 75 of SQC 1.
14 Refer para 82 of SQC 1.
15 The Council of the Institute had in August 2009, pursuant to the provisions of Rule 12 of the

Chartered Accountants (Procedures of Investigations of Professional and Other Misconduct and
Cases) Rules, 2007 had amended the audit documentation retention period appearing as ten years
in paragraph 83 of SQC 1 to seven years. As a consequence of above decision of the Council, the
audit documentation retention period appearing as ten years in paragraph A23 of SA 230, ‘Audit
Documentation’, issued in January 2009, shall also stand amended to seven years. The complete
text of the Announcement is published in Paragraph ‘C’, “Announcements/Clarifications” of Section
1, “Announcements of the Council regarding Status of Various Documents issued by the Institute of
Chartered Accountants of India”, included in Volume I.A of the Handbook.
16 Refer para 83 of SQC 1.

SA 230 12
assembly has been completed is the need to clarify existing audit documentation
arising from comments received during monitoring inspections performed by
internal or external parties.
Ownership of Audit Documentation
A25. 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 Institute, 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.
Material Modifications to ISA 230, “Audit Documentation”
Addition
1. Paragraph A23 of ISA 230 prescribes the minimum period of engagement
documentation as five years. Paragraph A23 of SA 230 prescribes the minimum
period of retention of engagement documentation as seven years since, the
provisions of the Chartered Accountants Act, 1949, and regulations made there
under, prescribe the minimum period of retention of working papers as seven
years.
2. An additional paragraph A25 has been added from SQC 1, giving
provisions regarding Ownership of Audit Documentation.

13 SA 230