Audit documents 004

As a professional serving clients in Bangladesh, you need an audit documentation system that satisfies both International Standards on Auditing (ISAs) and local statutory requirements under the Companies Act 1994.

Based on ICAB’s guidance and Big 4 best practices, the following list organizes audit documents chronologically. This represents the "Audit Lifecycle," ensuring you capture evidence from acceptance through to regulatory filing .

Phase 1: Pre-Engagement & Acceptance (Before Fieldwork)

Before signing, you must verify independence and capacity. This phase documents your right and ability to perform the audit.

· Engagement Letter: Signed agreement outlining scope, timeline, and fees (Companies Act 1994, Section 210 requires formal intimation of appointment) .

· Independence & Objectivity Confirmation: Written confirmation that the firm is free from conflicts of interest (IESBA Code/ICAB Bye-Laws) .

· Client Acceptance/Continuance Form: Evaluation of client integrity and assessment of engagement risks (Required by ISQC 1/ISA 220) .

· Notification to RJSC: Form documenting the auditor’s appointment (must be filed within 7 days of appointment per Section 210) .

Phase 2: Planning & Risk Assessment (At the Start of the Period)

Documents the strategy and identifies where misstatements are likely to occur.

· Audit Planning Memorandum: Overall audit strategy, timing, and direction of the engagement.

· Risk Assessment Documentation: Identification of inherent and control risks, including fraud risks (ISA 315 requires recording how risks were identified) .

· Internal Control Understanding: Flowcharts, narratives, or walkthroughs documenting the entity's internal control system.

· Materiality Calculation Worksheet: Determination of overall performance materiality and clearly trivial threshold.

· Audit Plan/Program: Detailed nature, timing, and extent of planned procedures for each material account.

Phase 3: Execution & Fieldwork (During the Year & Post Year-End)

The core evidence gathering phase. ICAB's "Dummy Audit File" heavily emphasizes this section .

· Permanent File Documents: Company incorporation documents, MOA/AOA, and significant contracts (updated annually).

· Lead Schedules & Trial Balance: Schedules tying the trial balance to the financial statements.

· Test of Controls Working Papers: Evidence of operating effectiveness of controls (sampling and results).

· Substantive Procedure Working Papers: Detailed testing of transactions, balances (AR, AP, Inventory), and disclosures.

· Analytical Review Sheets: Ratio analysis and trend fluctuations with explanations (ISA 520).

· External Confirmations: Bank letters, receivable/payable confirmations, and lawyer letters.

· ICAB DVS (Document Verification System) Log: Generation of the Document Verification Code (DVC) . Effective Dec 1, 2020, all audit reports are invalid without this code .

Phase 4: Review & Completion (After Evidence is Gathered)

Ensures quality control before the opinion is issued. Includes "Hot Reviews" (before report signing).

· Summary of Unadjusted Differences: Schedule of identified misstatements (quantitative/qualitative) left unadjusted.

· Significant Matters Log: Record of consultations, disagreements, or difficulties encountered (Required by ISA 230) .

· Subsequent Events Review: Documentation of procedures performed between year-end and report date.

· Management Representation Letter: Signed letter from management confirming responsibility for information provided.

· Written Representations on Fraud: Management’s specific acknowledgment of fraud prevention responsibility.

· Engagement Quality Control Review (EQCR) Checklist: Independent review by a second partner (Required for listed entities/PIEs) .

Phase 5: Finalization & Reporting (The Deliverable)

The culmination of the audit.

· Independent Auditor’s Report: Final opinion (Unmodified, Qualified, Adverse, or Disclaimer) including Key Audit Matters (KAM) for listed entities (Based on ISA 700/701) .

· Report to Those Charged with Governance (TCWG) : Formal letter to the Audit Committee regarding internal control deficiencies.

· Management Letter: Recommendations to management for operational or control improvements.

Phase 6: Assembly & Retention (Post-Reporting)

Legal and professional requirements for closing the file.

· Final File Assembly Checklist: Administrative completion check. ISA 230 mandates that the final audit file must be assembled within 60 days of the date of the auditor's report .

· Document Retention Log: ICAB requires retention for a minimum of 5 years from the report date (ISA 230) . The Companies Act 1994 also implies retention consistent with company record-keeping requirements.

· Annual Return to ICAB: Practicing firms must submit an annual return of clients to ICAB by February 15 of the following year. Failure blocks renewal of the Practicing Certificate .

Summary of Local Regulatory Links (BD Context)

Regulatory Body Key Requirement Relevant Document

ICAB Quality Assurance Audit Practice Manual (APM) Compliance & DVC 

RJSC Statutory Filing Audited Financial Statements (filed within 30 days of AGM) 

BSEC Public Interest Entities Key Audit Matters (KAM) & Enhanced Auditor's Report 

For a practical template, refer to the ICAB Dummy Audit Working Paper File (Manufacturing Sector) available on the ICAB website, which aligns perfectly with this sequence .