Accounting

How to Achieve Outstanding Audit Documentation

Joe Hartman, Audit Director

January 19, 2018

How to Achieve Outstanding Audit Documentation

It is the auditor’s responsibility to prepare documentation that provides sufficient and appropriate record of the basis for the auditor’s report and evidence that the audit was planned and performed in accordance with generally accepted auditing standards (GAAS) and applicable legal and regulatory requirements. Examples of audit documentation work papers include the following:

Audit plans
Issues memorandum
Summaries of significant findings/issues
Letters of confirmation or representation
Checklists
Correspondence
Analysis

Most auditors have heard the saying “Work papers need to stand alone”, meaning a reviewer shouldn’t have to ask additional questions to understand the purpose of the work paper, what was tested, findings and how the conclusion was reached. Someone needs to be able to easily pick up their work papers and continue where they left off—there should be no undocumented knowledge pertinent to understanding the work. Here is a list of common documentation examples that should be considered to be included as part of an individual audit work paper: 1. Purpose: What is the purpose of the document and why it’s included? Give the document a name and describe what it is used for, unless it’s completely obvious. 2. Source: Note who provided the document to you (name and title). 3. Tick and tie the documentation: For example, you should add a “tickmark” to an account reconciliation total to tie out to the ledger. The meaning of each “tickmark” must be clearly explained within each piece of audit documentation or on a separate document that explains the “tickmark” codes. Standard “tickmark” codes may be used and explained on a standard “tickmark” legend/key. 4. Nature: Document (or reference where it is documented) the nature of the audit procedures you are performing. 5. Timing: Document (or reference where it is documented) the date range of your tests: January through April, or a different population? 6. Extent: Document (or reference where it is documented) how many samples are you selecting and note the reasoning for selecting that size. Each audit firm or audit department should have a sample size guidance to follow (e.g., use of sampling form, etc.). 7. Exceptions or deviations noted: Any significant findings or issues that arise during the audit should be documented and how they were addressed and the conclusions reached. 8. Conclusion: This is the overall determination if the objective of the auditor has been met. Overall an auditor should prepare audit documentation so it’s sufficient for an experienced auditor, having no previous connection with the audit, to understand the nature, timing, and extent of the audit procedures performed, along with the results, evidence obtained, any significant findings and finally the conclusions reached along with any significant professional judgments made in reaching those conclusions.

Harmony, Restorative, Analytical, Developer, Achiever

Joe Hartman

Audit Director

Joe Hartman, Audit Director, began his career in 2006. Since then, he has developed comprehensive expertise in accounting, auditing, and consulting services and currently leads quality control in the audit department, ensuring high adherence to standards.

Leveraging his experience in assurance services, Joe focuses on complex industries, including construction, real estate, and manufacturing and distribution. He prioritizes building strong client relationships and guiding them through challenging business decisions with a collaborative, analytical approach.

At Lutz, Joe's leadership has elevated the firm's audit practice through his talent for team building and unwavering commitment to quality standards. His methodical approach to quality control has strengthened internal processes, while his collaborative management style creates an environment where team members consistently deliver superior client outcomes.

Joe lives in Omaha, NE, with his wife Ashley and their children Eva and Collins. Outside the office, he can be found cheering on the Huskers, golfing, watching his kids play sports, and spending time with family.

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How to Achieve Outstanding Audit Documentation

Joe Hartman

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