Distinguish between Permanent Audit Files and Current audit files.

Auditing and Assurance Revision Questions and Answers

Permanent audit files, in case of recurring audits, are working paper file which are updated with new information of continuing importance to succeeding audits. The permanent audit file normally includes:

 Information concerning the legal and organizational structure of the clients. In the case of a company, this includes the Memorandum and Articles of Association. In case of statutory corporation, this includes the Act and Regulation under which the corporation functions.

 Extracts or copies of important legal documents, agreements and minutes relevant to the audit.

 A record of the study and evaluation of the internal controls related to the accounting system.

 Copies of audited financial statements of prior years.

 Analysis of significant ratios and trends.

 Copies of management letters issued by the auditor, if any.

 Record of communication with the retiring auditor, if any, before acceptance of the appointment as auditor.

 Notes regarding significant accounting policies.

 Significant audit observation or earlier years, etc.

Current audit files contain information relevant for the audit of a single period.
A current audit file normally includes.

 Correspondence relating to acceptance of annual re-appointment.

 Extracts or important matters in the minutes of Board Meetings and General Meetings, as are relevant to audit.

 Evidence of planning process of audit and audit programme.

 Analysis of transaction and balances.

 A record of the nature, timing and extent of auditing procedures performed and the results of such procedures.

 Evidence that work performed by assistants was supervised and reviewed.

 Copies of letters or notes concerning audit matters communicated to or discussed with the client, including the terms of the engagement and material weaknesses in relevant internal controls.
 Letters of representations or confirmation received from the client.
 Conclusions reached by the auditor concerning significant aspects of the audit, including the manner in which expectations and unusual matters, if any, disclosed by auditor‟s procedure where resolved or treated.
 Copies of the financial information being reported on and the related audit reports, etc.

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