Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
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<str<strong>on</strong>g>Guide</str<strong>on</strong>g> <str<strong>on</strong>g>to</str<strong>on</strong>g> <str<strong>on</strong>g>Us<strong>in</strong>g</str<strong>on</strong>g> <str<strong>on</strong>g>Internati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Standards</str<strong>on</strong>g> <strong>on</strong> <strong>Audit<strong>in</strong>g</strong> <strong>in</strong> the Audits of Small- and Medium-Sized Entities Volume 1—Core C<strong>on</strong>cepts<br />
16.6 Electr<strong>on</strong>ic Documents<br />
Many account<strong>in</strong>g firms have replaced (or are <strong>in</strong> the process of replac<strong>in</strong>g) paper-based engagement files with<br />
electr<strong>on</strong>ic files. In some cases, even though the work was performed and reviewed electr<strong>on</strong>ically, paper<br />
files are ma<strong>in</strong>ta<strong>in</strong>ed as the permanent record of work performed. Documents/forms are <strong>in</strong>itiated <strong>in</strong> digital<br />
form, client records are scanned electr<strong>on</strong>ically, and all data is s<str<strong>on</strong>g>to</str<strong>on</strong>g>red electr<strong>on</strong>ically. It is pr<strong>in</strong>ted <strong>on</strong> paper <strong>on</strong>ly<br />
after all the work is completed and reviewed.<br />
There are two types of electr<strong>on</strong>ic documents:<br />
• Work-<strong>in</strong>-process; and<br />
• Static <strong>in</strong>formati<strong>on</strong>.<br />
Work-<strong>in</strong>-Process<br />
Work-<strong>in</strong>-process c<strong>on</strong>sists of dynamic <strong>in</strong>formati<strong>on</strong> that is be<strong>in</strong>g developed and updated as the audit<br />
progresses. Examples <strong>in</strong>clude blank audit forms and letter templates, <strong>in</strong>dustry knowledge and key<br />
performance <strong>in</strong>dica<str<strong>on</strong>g>to</str<strong>on</strong>g>rs, questi<strong>on</strong>naires, logic trees, the firm’s policies, diagnostics and the previous period’s<br />
f<strong>in</strong>ancial data, <strong>in</strong>formati<strong>on</strong>, assumpti<strong>on</strong>s, etc. that may be used <strong>in</strong> perform<strong>in</strong>g this period’s analytical<br />
procedures. This <strong>in</strong>formati<strong>on</strong> is often c<strong>on</strong>ta<strong>in</strong>ed with<strong>in</strong> software applicati<strong>on</strong>s and electr<strong>on</strong>ic audit <str<strong>on</strong>g>to</str<strong>on</strong>g>ols.<br />
Static Informati<strong>on</strong><br />
Static <strong>in</strong>formati<strong>on</strong> c<strong>on</strong>sists of f<strong>in</strong>al file documents, such as the f<strong>in</strong>ancial statements and completed work<strong>in</strong>g<br />
papers, that will not change and may well be required for reference <strong>in</strong> future years. F<strong>in</strong>al or static documents<br />
must be reta<strong>in</strong>ed <strong>in</strong> a format where the <strong>in</strong>formati<strong>on</strong> can be retrieved easily <strong>in</strong> later years.<br />
Legacy Software<br />
Leav<strong>in</strong>g the <strong>in</strong>formati<strong>on</strong> <strong>in</strong> a format used by a software applicati<strong>on</strong> can be problematic if the software<br />
applicati<strong>on</strong> is updated with a new file format. The old file may not be capable of be<strong>in</strong>g opened unless a copy<br />
of the old software applicati<strong>on</strong> is also ma<strong>in</strong>ta<strong>in</strong>ed. To overcome this problem, many firms are now sav<strong>in</strong>g their<br />
f<strong>in</strong>al file documents <strong>in</strong> a medium called portable document format (PDF). PDF has been accepted and used<br />
by government agencies and account<strong>in</strong>g firms around the world. The firm’s policies should state that f<strong>in</strong>al<br />
documents are not <str<strong>on</strong>g>to</str<strong>on</strong>g> be edited.<br />
Advantages of Au<str<strong>on</strong>g>to</str<strong>on</strong>g>mati<strong>on</strong><br />
Ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g audit files <strong>in</strong> an electr<strong>on</strong>ic form enables some adm<strong>in</strong>istrative functi<strong>on</strong>s <str<strong>on</strong>g>to</str<strong>on</strong>g> be au<str<strong>on</strong>g>to</str<strong>on</strong>g>mated, and<br />
provides additi<strong>on</strong>al flexibility for engagement team members. For example:<br />
• Specific work<strong>in</strong>g papers can be accessed directly from the <strong>in</strong>dex;<br />
• Files and documents can be easily shared or reviewed with others <strong>in</strong> distant locati<strong>on</strong>s;<br />
• New audit folders and documents can be created, renamed, moved, copied, or deleted from the <strong>in</strong>dex;<br />
• The detailed <strong>in</strong>dex can be collapsed <str<strong>on</strong>g>to</str<strong>on</strong>g> reveal its overall structure, or expanded as needed, mak<strong>in</strong>g it<br />
easier <str<strong>on</strong>g>to</str<strong>on</strong>g> see the big picture and locate key documents;<br />
• Cus<str<strong>on</strong>g>to</str<strong>on</strong>g>mized names can be given <str<strong>on</strong>g>to</str<strong>on</strong>g> important documents. This can help other team members <str<strong>on</strong>g>to</str<strong>on</strong>g><br />
<strong>in</strong>terpret the c<strong>on</strong>tents of a document from its name;<br />
• Review functi<strong>on</strong>s can be au<str<strong>on</strong>g>to</str<strong>on</strong>g>mated such as check<strong>in</strong>g all or part of the audit file for excepti<strong>on</strong>s,<br />
outstand<strong>in</strong>g review notes, and preparer/reviewer sign-offs;