Engagement documentation, also known as audit documentation or audit working papers, refers to the records and files that auditors compile during an audit to support their audit procedures, findings, conclusions, and opinions. These documents serve as evidence of the work performed by the auditors, the audit evidence obtained, and the basis for the auditors’ conclusions.
Engagement documentation typically includes a wide range of documents and information, such as:
- Audit planning documents: These include the audit plan, risk assessments, client acceptance and continuance forms, and the engagement letter outlining the terms and conditions of the audit.
- Internal control documentation: This consists of flowcharts, narratives, questionnaires, and other documents that help auditors understand and evaluate the client’s internal control environment.
- Audit program and procedures: This includes the detailed audit steps and tests designed to gather audit evidence, such as substantive procedures, tests of controls, and analytical procedures.
- Audit evidence: Auditors collect various types of evidence, including invoices, bank statements, contracts, and other supporting documents, as well as electronic data, correspondence, and memos.
- Working papers: These are documents created by the auditors, which summarize their analyses, computations, reconciliations, and other procedures performed during the audit. They also record any discrepancies, exceptions, or issues identified and their resolution.
- Communication and correspondence: This may include communication with the client, third parties (e.g., banks, lawyers, or other experts), and those charged with governance (e.g., the board of directors or the audit committee).
- Review and supervision records: These include documentation of the review and supervision process, including any review notes, comments, and conclusions made by the engagement team members and engagement partner.
- Audit conclusions and reports: This encompasses the auditors’ final conclusions, the draft and final versions of the audit report, and any other reports or communications prepared as part of the audit engagement.
Engagement documentation is crucial for several reasons, including:
- Providing evidence that the audit was conducted in accordance with applicable auditing standards and regulatory requirements.
- Facilitating the planning, performance, and supervision of the audit engagement.
- Enabling effective review and quality control of the audit work performed.
- Assisting in addressing any future inquiries or legal proceedings related to the audit.
Auditors must retain engagement documentation for a specified period, as required by professional standards and applicable laws and regulations.