Reply To: The Random Post Thread (Game Potential)
Inflicting more of my misery on you poor folks…
Which of the following is required documentation in an audit in accordance with generally accepted auditing standards?
A: A flowchart or narrative of the accounting system describing the recording and classification of transactions for financial reporting.
B: An audit program setting forth in detail the procedures necessary to accomplish the engagement’s objectives.
C: A planning memorandum establishing the timing of the audit procedures and coordinating the assistance of entity personnel.
D: An internal control questionnaire identifying policies and procedures that assure specific objectives will be achieved.
You guessed it. The correct answer is…
B. In planning the audit, the auditor should consider the nature, extent and timing of work to be done and should prepare a written audit program.This program, or set of programs, should present in reasonable detail the audit procedures considered necessary to accomplish the objectives of the audit. Answers (a) and (d) refer to flowcharts and internal control questionnaires, which are optional methods used to document the auditor’s understanding of the client’s internal control structure. Since there are alternatives available to the auditor, flowcharts and questionnaires are not required documentation. Answer (c) refersto a planning memorandum, which may be helpful in an audit but is not required by generally accepted auditing standards.