Auditors requirement to keep records

Lantus

Some general advice needed.

Is an auditor required to keep the information used as a basis for the production of an annual audit report. i.e. accounts, bank records or whatever or do they just normally discard or return it all once finished with? If they are required to keep it then how long for.

Many thanks for your help on what I hope all you keen accounting minds should know straight off.

Ideo

They are required to evidence used in forming their audit opinion for a period of 7 years

EDIT: Actually it is 5 years as prescribed in the ISAs, but I think most firms usually retain evidence for 7 years

For reference http://www.ifac.org/sites/default/files/downloads/a011-2010-iaasb-handbook-isa-230.pdf

A23.
ISQC 1 (or national requirements that ar
e at least as demanding) requires firms
to establish policies and procedures
for the retention of engagement
documentation.
15
The retention period for audit engagements ordinarily is no
shorter than five years from the date of th
e auditor’s report, or, if later, the date
of the group auditor’s report.
16

Marcusm

From late 90s/early 2000s onwards, a large firm with which I worked had effectively ceased retaining copies of underlying records etc. They retained evidence of the tests which they had undertaken and discussions with management but would not have retained bank statements etc. They would have set out tests in the audit planning stage, documented the undertaking of those tests and further discussions/investigation of discrepancies/unusual items but would not have had an audit trail to each number in the financial statements from underlying records. It was perceived to be a stronger approach from a risk management perspective.

I have no idea whether that has broadened out or whether it relates principally to very large clients.

ants09

INTERNATIONAL STANDARD ON AUDITING
(UK AND IRELAND) 230 working papers

Confidentiality, Safe Custody, Retention and Ownership of Working Papers

13. The auditor should adopt appropriate procedures for maintaining the
confidentiality and safe custody of the working papers and for retaining them for a period sufficient to meet the needs of the practice
and in accordance with legal and professional requirements of record
retention. 1


1 In the UK and Republic of Ireland this requirement must be applied having regard to specific requirements of the Audit Regulations.

Audit Regulation 3.08b states that “A Registered Auditor must keep all audit working papers which auditing standards require for a period of at least six years. The period starts with the end of the accounting period to which the papers relate.

Morte

The accounting records should be held by the company being audited for 6 years. This will comprise the original invoices, bank records, trial balances, and so on. If they gave them to the auditor during the audit then they should get them back at the end of the audit.

The auditor is required to keep their audit file as explained above. This should contain all the information used to form the audit opinion and it should be possible for another auditor to come along and give an audit opinion based solely on what is on the file. The audit file will be a mixture of the auditor's workings and copies (not originals) of some of the most important accounting records. The deeds to a new building would be important, an invoice for €20 of biros picked out in sample testing isn't worth copying. It's enough to note you picked it out and it tested ok.

There would be an overlap on jobs where the auditor both does the accounts and then does the audit as well. The auditor may get a "shoe box" with all the cheque stubs and invoices and work from there. Summaries of the purchases and bank are part of the accounting records rather than the audit. Practically speaking the auditor will keep whatever they produce on their own file and just give the "shoe box" back to the client.

Lantus

Thank you all for your replies. Some great info which I dont think I would of found myself in any reasonable time frame.

So they are required to keep a 'file' on the audit which should contain enough information that would allow another auditor to validate that the work they did was correct. The actual specifics of that would vary from audit to audit though and depend on the nature of the company if I read that correctly.

Would it be possible for the company to request this file to see what was used as the basis of the audit (where it was felt that something possibly was not correct) or can only another audit firm request this.


Many thanks