Requirements of Internal Audit Documentation

Standard on Internal Audit (SIA) 3: Documentation

The third Standard on Internal Audit states the documentation that is required to be done while conducting the Internal Audit process. The Internal Auditor has to undertake all the essential documents and data and records that support his/ her findings or become the base of the audit report. The following points are to be kept in mind whenever documentation takes place-

  • Reviewer
  • Use of documentation
  • Factors affecting the Documentation
  • Matters that need to be documented
  • Identification of Preparer and Reviewer
  • Exceptional Circumstances
  • Document Retention and Access

Audit Documentation

To understand Internal Audit documentation, it is required to understand the above-mentioned points in detail. The section below provides a detailed view on these points-

  • Reviewer: Reviewer is a person or an Individual who has the following skills and qualifications-
  • Knowledge about the Standards on Internal Audit as well all other important procurements provided by the ICAI
  • Have understanding about the internal audit issues that are relevant to industry type of the company.
  • One who understands the business environment and culture in which the operations of the organization are carried further
  • One who has reasonable knowledge about the internal audit processes and have ample experience in the same
  • Use of Documentation: The Internal Audit Documentation enables and helps an internal auditor having professional experience and who has no previous connection with the company being audited in understanding the following-
  • The extent, nature and timing of the procedures of the performed audit
  • All the terms and conditions related to the engagement in internal audit, scope of the audit work, requirements of reporting, other special and specific conditions and requirements that affect the Internal Audit Service
  • Outcomes of the audit procedures and the obtained Internal Audit Evidences
  • All the matters that arise during the auditing and are of significant nature
  • Conclusions made on the basis of such matters
  • Factors affecting Documentation: The factors that affect the Internal Audit Documentation-
  • The nature and extent of the audit process that is to be performed
  • The nature and extent of the identified exceptions
  • The extent of the required judgment while performing the work
  • The methodology and tools used in the audit
  • Requirement of a basis to draw conclusions
  • The risk in the material misstatements hence identified
  • The significance of the obtained or gathered evidences during the audit
  • The extent of judgment required in performing the work.
  • Matters to be documented: There are certain matters that arise during the internal audit service and are required to be properly documented. These matters are-
  • Charter of the Internal Audit or Letter of Engagement
  • The questionnaire for reviewing Internal Control System
  • Checklists and flowcharts
  • Plan and program of the internal audit
  • Chart of the structural base of the organization
  • MIS Report
  • Progress Report of the company
  • Copies of all the agreements and contracts of great significance to the entity
  • Performed analytical procedures and the result drawn from them
  • Reports of the internal review
  • Results drawn from the assessment of the internal control and risk management
  • Obtained representations and certifications from the management of the company
  • Identification of Preparer and Reviewer: For preparing the Internal Audit Documentation, the preparer and the reviewer must be identified at the first place, only then the further process can be undertaken. To identify them, the following are to be considered-
  • Who performed the assigned task
  • Date of the completion of such task
  • Who reviewed the performed task
  • Date and extent of the provided review
  • Reasons behind creating particular type of Internal Audit Documentation
  • Source of information to prepare them
  • Cross references with the previous documentation
  • Signatures of the preparer and the reviewer at the end of their work
  • Exceptional Circumstances: The exceptional circumstances that have to be inserted while preparing the Internal Audit Documentation are-
  • Details of the encountered circumstances.
  • Documentary evidences for them
  • Details of the additional procedure performed in the audit
  • The audit evidences collected for the same
  • The conclusions drawn from such circumstances
  • Details about the person who made the resulting changes in the Internal Audit Documentation and reviewed them
  • Details of the timeline and date when it was done
  • Document Retention and Access: This is to be considered along with the following-
  • Formulating the policies for the retention and custody
  • Audit documents ownership
  • Retention of the said documents
  • Access provided to the third party

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
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