Page 204 - CA Inter Audit PARAM

Ca Ravi Taori
summary (sometimes known as a completion memorandum) that describes
• The significant matters identified during the audit and how they were addressed, or
• that includes cross- references to other relevant supporting audit documentation that provides
such information.

➢ Such a summary may facilitate effective and efficient reviews and inspections of the audit
documentation, particularly for large and complex audits. Further, the preparation of such a summary
may assist the auditor’s consideration of the significant matters.
➢ It may also help the auditor to consider whether, in light of the audit procedures performed and
conclusions reached, there is any individual relevant SA objective that the auditor cannot achieve that
would prevent the auditor from achieving the overall objectives of the auditor

QNO-- Documentation of Significant Matter New Course - (SM25)
230.17.50 Bhaskar CNO -- SA230.080
During the course of audit of a company, an issue arose relating to treatment of interest costs of
company on its restructured loans taken from a bank. This important matter was discussed with CFO of
the company and was properly resolved. Is it necessary for the auditor to include in its working papers?
Answer Nature & Discussion of Significant matters.
The auditor shall document discussions of significant matters with management, those charged with
governance, and others, including the nature of the significant matters discussed and when and with
whom the discussions took place.

Inconsistencies with respect to Significant matters.
If the auditor identified information that is inconsistent with the auditor's final conclusion regarding a
significant matter, the auditor shall document how the auditor addressed the inconsistency

Discussion & Conclusion.
In the instant case, an important matter regarding treatment of interest costs of company on its
restructured loans taken from a bank directly impacting profits of the company was discussed. Although
issue was resolved, it is necessary to document the same by including detail of the person with whom
discussions took place along with date.

Judging the Significance of a Matter & Which is important Old Course – (M19R/N20M/N20R/N22R)
QNO--
230.19 for Documentation
Bhaskar CNO SA230.160
Judging the significance of a matter requires an objective analysis of the facts and circumstances.
Documentation of the professional judgments made, where significant, serves to explain the auditor’s
conclusions and to reinforce the quality of the judgment. Explain with the help of examples.
Answer ➢ Judging the significance of a matter requires an objective analysis of the facts and
circumstances.
• Examples of significant matters include:
• Matters that give rise to significant risks.
• Circumstances that cause the auditor significant difficulty in applying necessary
audit procedures.
• Results of audit procedures indicating:
o a need to revise the auditor’s previous assessment of the risks of material
misstatement and the auditor’s responses to those risks.
o that the financial statements could be materially misstated, or
• Findings that could result in a modification to the audit opinion or the inclusion
of an Emphasis of Matter Paragraph in the auditor’s report.

➢ Documentation depends on Professional Judgement
• An important factor in determining the form, content and extent of audit documentation
of significant matters is the extent of professional judgment exercised in performing the
work and evaluating the results.
• Documentation of the professional judgments made, where significant, serves to explain
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