Page 206 - CA Inter Audit PARAM

Ca Ravi Taori
working papers. No new audit conclusions were drawn, and the final audit file was assembled on 10th
October 2024.

On the basis of Standards on Auditing regarding audit documentation, comment on the action taken by CA
Tanuj
Answer As per SA 230, “Audit Documentation”, the auditor shall assemble the audit documentation in an audit file
and complete the administrative process of assembling the final audit file on a timely basis after the date of
the auditor’s report.

▪ An appropriate time limit within which to complete the assembly of the final audit file is ordinarily
not more than 60 days after the date of the auditor’s report. The completion of the assembly of the
final audit file after the date of the auditor’s report is an administrative process that does not involve
the performance of new audit procedures or the drawing of new conclusions.

▪ Changes may, however, be made to the audit documentation during the final assembly process, if
they are administrative in nature

▪ After the assembly of the final audit file has been completed, the auditor shall not delete or discard
audit documentation of any nature before the end of its retention period.

In the given situation, the auditor CA Tanuj has issued the auditor's report on 18th August 2024 for the
financial year ended on 31st March 2024. However, he discarded some supporting schedules and corrected
cross-referencing errors of working papers during the final assembly of the audit file by 10th October 2024
which is under prescribed time-limit of 60 days from the issuance of auditors report. Further, no new audit
conclusions were drawn. Thus, CA Tanuj can make said changes to the audit documentation during the final
assembly process.

QNO-- Rights of the auditor/ Lien ( Theory) Old Course – (P16M/N20E/M19E/M22E)
230.21 Bhaskar CNO SA230.180
Though legally auditor may exercise right of Lien in case of companies, it is mostly impracticable for legal
and practicable constraints. Do you agree?
Or
Write a short note on Auditor’s Lien.
Or
CA David was the auditor of Wood-pack Lid, for the year 2018-19. The company has failed to pay the dues
of CA David; hence he is contemplating on retaining the books & documents of the company that are in
his possession. Is the action of CA David valid? If yes, what are the conditions that should be looked into
before retaining the books and documents of the client?
Answer ➢ General Principles of Law
Person with lawful possession of property and worked on it, can exercise lien for non-payment of

his dues – Same logic can be applied to Client Books

Detail Text
In terms of the general principles of law, any person having the lawful possession of somebody else’s
property, on which he has worked, may retain the property for non-payment of his dues on account of the
work done on the property. On this premise, auditor can exercise lien on books and documents placed at his
possession by the client for non-payment of fees, for work done on the books and documents.

➢ ICAEW Conditions
The Institute of Chartered Accountants in England and Wales has expressed a similar view on the
following conditions: –
Auditor Can exercise lien subject to Conditions – Possession as per Authority of Client /
Documents belong to Client / Client Owes Money / Fees Money is Connected with Work on those
documents.

Detail Text
Auditor can exercise lien on books and documents placed at his possession by the client for non-payment of
fee for work done on the following conditions:
• Documents retained must belong to the client who owes the money;

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