Case 2 The Runners Shop Audit documentation provides written evidence that the auditor has complied with generally accepted auditing standards during the course of the audit The written audit documentation contains support for the decisions that were made during the planning of the audit specifically what procedures would be performed the procedures performed by the auditor the evidence obtained while conducting audit procedures and the overall conclusions the auditor reached at the end of the audit The audit documentation communicates the quality of the audit measured as the compliance with generally accepted auditing standards 2 Title The Title allows the auditor or member of the audit team to quickly ascertain the client and subject matter contained in the audit files In addition because an audit firm will have many different clients the same index numbers will be repeated in working papers of different clients The title further clarifies what papers belong to each client and what year the papers are documenting Source of Schedule Document Including the source of a schedule or document provides evidence that the audit work performed is actually being done on information contained in the clients books and is a necessary part of the audit Work Performed
The auditor s initials on work papers eliminates ambiguity as to who is responsible for the audit work performed The initials clearly indicate who is responsible for reviewing the work performed and to whom questions regarding the audit should be addressed Indexing Indexing allows the auditors to organize the working papers in a set order which makes it easier when the work papers are later reviewed Indexing also provides a system of cross referencing where auditors are able to quickly list a paper s index number to reference information on other work papers Cross Referencing Cross referencing allows the auditor to reference information contained in another work paper by using index numbers rather than having to list or describe the referenced information contained on another sheet Tick Mark footnote Explanations Tick Mark explanations provide information regarding the type of audit procedures performed If the auditor tasked with reviewing the work or an auditor unrelated to the audit had questions regarding certain procedures used he would be able to find clarification of the procedures performed This allows for greater efficiency in both reviewing the work paper and providing clarification should questions arise in the future 3 F1 111 the 12 31 13 Balance of 48 460 00 for First Commercial Bank cross footed to F1 113 cannot be found on F1 113 F1 111 Tick Mark indicating footing has been changed from f to cf with no explanation in the tickmark legend F1 111
No evidence the non current portion of the first commercial banks was recomputed based on the terms of the note without exception F1 111 No evidence the loan terms on the Notes Payable Schedule were cross referenced with the actual loan agreement terms The loan terms on the Notes Payable Schedule only cross reference the confirmations with the banks F1 112 the auditor did not provide any evidence that the last interest payment dates were confirmed to be correct F1 112 the auditor did not indicate that the outstanding 12 31 13 interest balance of 1 344 71 for National Bank and Trust was recomputed Audit Procedure 4 F1 113 No initials indicating that this work paper has been reviewed F1 113 No documentation indicating that the 12 31 13 interest expense amounts have been cross referenced with Short Term and Long Term Debt Schedule F1 113 No tick mark legend explanation for the C tick marks next to the interest expense analytical procedure calculations F1 113 The interest expense analytical procedure cross foots to F1 111 where no amount for 84 460 can be found on the referenced work paper F1 113 Reductions for National Bank and Trust Notes Payable provides no evidence the the amount of reductions were agreed to amounts recorded in the 2013 cash receipts disbursement journals without exception F1 113 In the notes to the interest expense analytical procedure there is no explanation given as to why the difference between actual interest expense and calculated interest expense does not require further testing No explanation for why estimated amounts higher than reported amounts by less than 10 of of the reported amount are not material 4 According to PCAOB AS 1215 audit documentation must contain sufficient information to enable an experienced auditor having no previous connection with the engagement to a understand the nature timing extent and results of the procedures performed evidence obtained and conclusions reached and b determine who performed the work and the date such work was completed as well as the person who reviewed the work and the date of such review https pcaobus org Standards Auditing Pages AS1215 aspx These objectives were not met in Green and Brown LLP s audit documentation for The Runner s Shop For example on workpaper F1 113 where the estimated interest expense was calculated and compared to the actual interest expense no explanation is given as to how the conclusion was reached that estimated amounts not higher than 10 of the reported amounts are not material Work paper F1 113 also fails these objectives because there is no indication as to who reviewed the worker paper None of the workpapers indicate whether the date listed on the top of the workpapers indicates the date the audit was conducted or the date of review
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