If you’re working in the audit profession, you’ve likely come across an audit file that seemed to invite an endless stream of questions. You may have found yourself elaborating on procedures, objectives, and conclusions in painstaking detail—almost as if crafting a narrative.
It is ironic how a 13-page standard like ISA220 has added layers of audit work to the auditing profession, yet is barely covered in universities. During my articles and as an Audit Senior, I have noticed a troubling trend among new-generation auditors who frequently encounter "documentation review notes" from managers, partners and EQRs. These notes often highlight a failure in the WHY assertion - not due to a lack of performed procedures or evidence obtained, but due to incomplete or unclear explanations of the audit rationale.
As deadline approach and EQR sign-offs loom, auditors find themselves painstakingly explaining procedures from months prior. You might wonder, "If this is such a common issue, why isn't anyone addressing it?" The reality is that few truly understand ISA220 in a way that simplifies and demystifies it.
It’s quite simple: if you review your statement, procedure, objective, or conclusion and still find yourself asking “WHY?”, your job isn’t done. ISA 220 requires that a reasonably experienced auditor should be able to review your documentation and reach the same conclusions you did. Every unanswered “why” is another review note that could haunt you late at night! Ensuring clarity and completeness now saves you from having to explain or justify your work again during review stages, keeping your audit file stronger and reducing those last-minute revisions.
You might ask, “Can it really be that simple?” The answer is yes! At Accounting Warriors, we believe audit can and should be straightforward. Let’s dive into a common audit finding to illustrate just how manageable this process can be when approached correctly.
Documentation: "The following journals were determined to be routine therefore no further testing has been performed."
Review Notes:
WHY was this determine to be routine
What is the criteria for routine journals
Why was no testing deemed appropriate?
How does this address fraud risk in terms of ISA24
Correction: " Through our understanding of the business and enquiry with the client the following criteria has been determined for routine journals and applied accordingly:
Journals that are processed on a monthly recurring basis
Journals to which values do not generally differ materially on a month to month basis.
Journals pertaining to the daily maintaining of the entity's accounting records in accordance with IFRS such as allocation of cash receipts and payments.
In applying the above criteria to our journal population below we have noted that the following journals are processed on a monthly recuring basis with fairly similar amounts each month. Therefore they have been categorized as routine. Considering that these journals occur each month and is expected to occur each month no risk of management override of control in terms of ISA240 was noted. Therefore no further testing was deemed necessary. "
It’s fascinating how a small shift in documentation can turn an EQR’s view from insufficient testing to fully satisfactory. Adding just a few extra “WHY” statements can prevent those seemingly endless quality queries. These explanations not only clarify the audit trail but also align your documentation with the expectations of ISA 220, ensuring that a knowledgeable reviewer can easily follow your reasoning without additional questions. This proactive approach can save you significant time during reviews and enhance the overall quality of your audit work.
In conclusion, mastering audit documentation is about more than just recording evidence—it’s about crafting a clear and logical narrative that aligns with the standards of ISA 220. By proactively addressing the WHY behind each procedure, objective, and conclusion, you not only enhance the audit’s quality but also reduce the likelihood of tedious review notes from EQRs. This approach reinforces your work’s sufficiency, saving time and ensuring that each document can stand on its own. At Accounting Warriors, we know that a few well-placed clarifications can turn an arduous review into a seamless approval, transforming the audit process into something truly manageable.
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