Permanent Audit Files (PAF) and Current Audit Files (CAF) For recurring audit engagements it is usual for

documentation which is of continuing importance (i.e., `permanent') to be filed separately from information relating primarily to the audit of a single period (i.e., `current'). General correspondence files are also likely to be maintained for each client although the engagement letter, management (weakness) letter and letters providing evidence (such as the bank report for audit purposes and management representation letter) will be filed on the current audit file. Permanent audit file ² typical contents Information concerning legal structure of entity (e.g., Memorandum and Articles of Association). Other documents of continuing importance: o terms of engagement; o minutes of important meetings; o debenture deeds; o mortgages and charges; o title deeds and lease agreements; o trade agreements and labour contracts; o profit share and bonus agreements; o royalty agreements. y Descriptions of nature and history of client's business, locations and products. y A list of client's investments (if any). y Organisation charts, with extra details for finance department. y Main accounting records, showing where kept and of what type (e.g., handwritten, computerised). y Copies of previous financial statements and auditor's reports thereon. y Previous reports to management (detailing weaknesses found in the accounting system. y Client's other professional advisers. y Client's insurance cover details. y Significant ratios and trends. y Accounting systems descriptions in flow chart and narrative form (see later). y Internal controls evaluation data: questionnaires and checklists (see later). y Principal accounting policies. Current audit file ² typical contents

y y

y Financial statements being audited (evidenced as having been agreed to accounting records and crossreferenced to supporting schedules). y Overall audit plan (including risk assessments and planning materiality) and audit program. y Schedule for each balance sheet item (including comparatives), cross-referenced to documents arising from external verification (e.g., direct confirmations of accounts receivable and attendance at physical inventory counting). y Copies of communications with other auditors, experts, and other third parties. y Schedule supporting each significant item in the income statement. y Checklist of compliance with statutory and IAS/FRS disclosure provisions. y A record of queries raised during the audit and their clearance, with notes for next year. y Schedule of queries not cleared for the manager/partner reviewing the audit. y Extracts of minutes of meetings of directors and shareholders (cross-referenced where relevant). y Report to management of material weaknesses in internal controls including client response. y Letter of representation received from management. y Job administration data: y partner and staff employed; y dates audit areas completed; y time summaries; y performance monitored against budget. y Working papers of results of tests, evaluation of systems, control weakness and action taken. y Schedule of results of audit tests on transactions and balances and conclusions reached (indexed and cross-referenced to demonstrate sufficient audit evidence).

y Job administration data: .. y Schedule supporting each significant item in the income statement. y A record of queries raised during the audit and their clearance. o title deeds and lease agreements. experts. y Extracts of minutes of meetings of directors and shareholders (cross-referenced where relevant). y Schedule for each balance sheet item (including comparatives). y Copies of previous financial statements and auditor's reports thereon.e. y Schedule of queries not cleared for the manager/partner reviewing the audit. o minutes of important meetings. Permanent Audit Files (PAF) and Current Audit Files (CAF) For recurring audit engagements it is usual for documentation which is of continuing importance (i.g. with notes for next year.. with extra details for finance department. inventory).g.e.. y Previous reports to management (detailing weaknesses found in the accounting system.. computerised). General correspondence files are also likely to be maintained for each client although the engagement letter.. Permanent audit file ² typical contents Information concerning legal structure of entity (e. y Accounting systems descriptions in flow chart and narrative form (see later). Other documents of continuing importance: o terms of engagement. y A list of client's investments (if any). locations and products. o royalty agreements. o trade agreements and labour contracts. y Descriptions of nature and history of client's business. y Significant ratios and trends. y Principal accounting policies. Memorandum and Articles of Association). y Overall audit plan (including risk assessments and planning materiality) and audit program. y Organisation charts. handwritten. y Accounts completion checklist.y Completed audit program. y Client's other professional advisers. Current audit file ² typical contents y y y Financial statements being audited (evidenced as having been agreed to accounting records and crossreferenced to supporting schedules). o debenture deeds. direct confirmations of accounts receivable and attendance at physical inventory counting). Separate files may also be set up for specific audit areas (e. y Checklist of compliance with statutory and IAS/FRS disclosure provisions. `current'). `permanent') to be filed separately from information relating primarily to the audit of a single period (i. o mortgages and charges. and other third parties. y Copies of communications with other auditors.. y Letter of representation received from management. cross-referenced to documents arising from external verification (e. o profit share and bonus agreements. showing where kept and of what type (e.g. y Internal controls evaluation data: questionnaires and checklists (see later). y Report to management of material weaknesses in internal controls including client response. management (weakness) letter and letters providing evidence (such as the bank report for audit purposes and management representation letter) will be filed on the current audit file. For larger clients Current files may be subdivided into `interim visit' and `final audit' and systems documentation may be held on a separate `systems' file.g. y Main accounting records. y Client's insurance cover details.

Permanent Audit Files (PAF) and Current Audit Files (CAF) For recurring audit engagements it is usual for documentation which is of continuing importance (i.e. direct confirmations of accounts receivable and attendance at physical inventory counting). y Schedule for each balance sheet item (including comparatives). y Client's insurance cover details.. Permanent audit file ² typical contents Information concerning legal structure of entity (e. . o debenture deeds. y Organisation charts. y Significant ratios and trends. Current audit file ² typical contents y y y Financial statements being audited (evidenced as having been agreed to accounting records and crossreferenced to supporting schedules). y Copies of communications with other auditors. y Accounting systems descriptions in flow chart and narrative form (see later).e. `current'). management (weakness) letter and letters providing evidence (such as the bank report for audit purposes and management representation letter) will be filed on the current audit file.. y Descriptions of nature and history of client's business... `permanent') to be filed separately from information relating primarily to the audit of a single period (i. o profit share and bonus agreements.g. cross-referenced to documents arising from external verification (e. and other third parties. o mortgages and charges.. y Principal accounting policies. y Accounts completion checklist. evaluation of systems. For larger clients Current files may be subdivided into `interim visit' and `final audit' and systems documentation may be held on a separate `systems' file. dates audit areas completed.y y y y partner and staff employed. y Overall audit plan (including risk assessments and planning materiality) and audit program. inventory). time summaries. y Main accounting records.g. o royalty agreements. Memorandum and Articles of Association). y Completed audit program. Separate files may also be set up for specific audit areas (e. computerised). y Working papers of results of tests. y Client's other professional advisers. o title deeds and lease agreements. General correspondence files are also likely to be maintained for each client although the engagement letter. locations and products. y Copies of previous financial statements and auditor's reports thereon. y Previous reports to management (detailing weaknesses found in the accounting system. y Internal controls evaluation data: questionnaires and checklists (see later). handwritten. control weakness and action taken. o minutes of important meetings..g. performance monitored against budget. showing where kept and of what type (e. y Schedule of results of audit tests on transactions and balances and conclusions reached (indexed and cross-referenced to demonstrate sufficient audit evidence). y Schedule supporting each significant item in the income statement. experts. Other documents of continuing importance: o terms of engagement. with extra details for finance department.g. o trade agreements and labour contracts. y A list of client's investments (if any).

y time summaries. with notes for next year.. y performance monitored against budget. Job administration data: y partner and staff employed. Extracts of minutes of meetings of directors and shareholders (cross-referenced where relevant). Report to management of material weaknesses in internal controls including client response. Schedule of queries not cleared for the manager/partner reviewing the audit.Checklist of compliance with statutory and IAS/FRS disclosure provisions. Separate files may also be set up for specific audit areas (e. evaluation of systems.g. y Accounts completion checklist. inventory). control weakness and action taken. y dates audit areas completed. y Working papers of results of tests. y Completed audit program. Letter of representation received from management. A record of queries raised during the audit and their clearance. For larger clients y y y y y y y Current files may be subdivided into `interim visit' and `final audit' and systems documentation may be held on a separate `systems' file. y Schedule of results of audit tests on transactions and balances and conclusions reached (indexed and cross-referenced to demonstrate sufficient audit evidence). .

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