ICAI issues implementation guide to Standard on Auditing (SA) 230

Posted on    16 December 2022


Concept of Documentation

2.1 Audit, according to Spicer and Pegler, "may be said to be such an examination of the books, accounts and vouchers of a business as will enable the auditor to satisfy that the Balance Sheet is properly drawn up, so as to give a true and fair view of the state of affairs of the business and the Profit or Loss for the financial period, according to the best of his information and the explanations given to him and as shown by the books, and if not, in what respect he is not satisfied."


2.2 Though the above definition addresses various aspects of an audit, one of the most important and relevant issues arising out of this definition is that the auditor needs to "satisfy himself that the financial statements are properly drawn up…", "… according
to best of his information and explanations given to him…", "… and if not, "in what respect the auditor is not satisfied".


2.3 An auditor, during the course of his audit may come across various materials in the form of deeds, agreements, contracts, invoices, vouchers, etc. which are the supporting materials to evidence the happening of an event/transaction. These are the basis for him to satisfy (or to not satisfy) himself in material aspects as to whether the financial statements give a true and fair view of the state of the affairs of the business and of the profit and loss for that period.

2.4 A document is any material which provides evidence of work performed, action taken or the happening of an event. The audit documentation may be recorded in paper or electronic form as mentioned in paragraph A3 of SA 230. Examples of documents include work papers, copy or abstract of signed agreements, videos, pictures, spreadsheets, transcripts, correspondences, data in electronic form containing the records in a systematic manner etc.

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