Guide to Using International Standards on Auditing in - IFAC

33
<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
A team debriefing meeting (<strong>to</strong>wards or at the end of the fieldwork) is not a specific requirement of the ISAs,
but can be useful for staff <strong>to</strong> discuss the audit findings, identify any indications of fraud, and determine the
need (if any) <strong>to</strong> perform any further audit procedures.
When all procedures have been performed and conclusions reached:
• Audit findings should be reported <strong>to</strong> management and those charged with governance; and
• An audit opinion should be formed and a decision made on the appropriate wording for the audi<strong>to</strong>r’s report.
3.4 Documentation
Sufficient audit documentation is required <strong>to</strong> enable an experienced audi<strong>to</strong>r, having no previous connection
with the audit, <strong>to</strong> understand:
• The nature, timing, and extent of the audit procedures performed;
• The results of performing those procedures and the audit evidence obtained; and
• Significant matters arising during the audit, the conclusions reached thereon; and significant
professional judgments made in reaching those conclusions.
Audit documentation for a smaller entity is generally less extensive than that for the audit of a larger entity.
For example, various aspects of the audit could be recorded <strong>to</strong>gether in a single document, with crossreferences
<strong>to</strong> supporting working papers, as appropriate.
It is not necessary for the audi<strong>to</strong>r <strong>to</strong> document:
• Every minor matter considered, or every professional judgment made, in an audit; and
• Compliance with matters for which compliance is demonstrated by documents included within the
audit file. For example, an audit plan on file demonstrates that the audit was planned, and a signed
engagement letter demonstrates that the audi<strong>to</strong>r has agreed <strong>to</strong> the terms of the audit engagement.
3.5 Benefits of the Risk-Based Audit
Some of the benefits of the risk-based approach are summarized in the exhibit below.
Exhibit 3.5-1
Benefits
Time Flexibility
When Audit
Work Needs
<strong>to</strong> be Performed
Description
Risk assessment procedures can often be performed earlier in the entity’s fiscal
period than was possible before risk-based auditing was introduced. Because risk
assessment procedures do not involve the detailed testing of transactions and
balances, they can be performed well before the period end, assuming no major
operational changes are anticipated. This can help in balancing the workload of
audit staff more evenly throughout the period. It may provide the client with time <strong>to</strong>
respond <strong>to</strong> identified (and communicated) weaknesses in internal control and other
requests for assistance before the commencement of period-end audit fieldwork.
However, where interim financial information is not readily available, the analytical
risk assessment procedures may have <strong>to</strong> be performed at a later date.