Audit documents 005

A comprehensive audit engagement, following the standards adopted in Bangladesh (ISAs as BSAs), is essentially a journey of compiling a structured portfolio of evidence at each stage. Below is the full, time-sequenced document checklist that Big 4 firms use in the Bangladesh context. The "Key Standards" referenced throughout are the Bangladesh Standards on Auditing (BSA) aligned with ISAs.

🗓️ Phase 1: Pre-Engagement

Objective: Establish the groundwork and ensure the audit is viable and ethical.

· Engagement Acceptance/Continuance Form: Analyzing independence, integrity of management, and competency to perform the audit.

· Engagement Letter: A formal contract outlining the scope, timeline, and fees; required to be signed before the audit starts.

· Permanent Audit File (Initial Section): Contains key client documents (e.g., Charter, Articles of Association, prior-period financial statements).

· Audit Independence & Objectivity Confirmation: Forms signed by all engagement team members confirming they meet ICAB ethical requirements.

📋 Phase 2: Planning Phase (ISA 300)

Objective: Develop a detailed roadmap for the engagement.

· Preliminary Risk Assessment & Analytical Review: High-level analysis of financial data to identify initial risk areas.

· Materiality Calculation Worksheet: Quantitative calculation of materiality levels for the engagement.

· Overall Audit Strategy Memorandum: Setting the direction of the audit (scope, timing, and key decisions).

· Detailed Audit Plan (or Audit Program): Nature, timing, and extent of audit procedures for each material assertion.

· Audit Budget and Staff Assignment Schedule: Resource allocation plan.

· Timing & Communication Schedule: Meeting timeline with client management, audit committee, and Board meetings.

🔍 Phase 3: Risk Assessment Phase (ISA 315)

Objective: Gain a deep understanding of the entity to identify misstatement risks.

· Entity-Level Controls Documentation (Narrative/Flowchart): Finalized understanding of the entity's control environment.

· Process Walkthrough Documents: Narrative or flowchart for key cycles (Revenue, Payroll, Inventory, etc.), signed by process owners.

· Risk Assessment Matrix/Linkage Document: Mapping identified risks to the audit plan.

· IT General Controls (ITGC) Documentation: Output from evaluating controls over IT systems (for complex entities or banks).

⚙️ Phase 4: Fieldwork Phase (ISA 330 & ISA 500)

Objective: Execute audit procedures to gather sufficient and appropriate evidence.

· Lead Schedules & Trial Balance: Summarizing account balances, linking detailed testing to financial statements.

· Test of Controls Working Papers: Procedures and conclusions for each key control tested.

· Substantive Analytical Procedures: Reasonableness analyses (ratios, trend lines, etc.) with explanations for significant fluctuations.

· Substantive Test of Details Schedules: Primarily tests of balances/transactions for revenue, purchases, payroll, inventory, and bank confirmations (including Bangladesh Bank reporting requirements for financial institutions).

· External Confirmation Log: Records of confirmations (e.g., bank, receivables/payables) and follow-ups on non-responses.

· Related Party Transactions Documentation: Confirmation that related party transactions and disclosures have been properly accounted for.

🏁 Phase 5: Completion Phase (ISA 450 & ISA 580)

Objective: Evaluate audit findings and obtain final management endorsements.

· Summary of Uncorrected Misstatements (SUM): List of all identified misstatements tracked and evaluated, reviewed by management.

· Subsequent Events Review: Review procedures for events up to the audit report date, including minutes, inquiries, and legal letters.

· Going Concern Assessment Documentation: Evaluation of management's assumptions and the entity's ability to continue as a going concern.

· Management Representation Letter: Signed by management, confirming their responsibility for the financial statements and completeness of information provided.

· Written Representations on Specific Matters: Additional letters regarding fraud, compliance, or related parties if applicable.

· Engagement Quality Control Review (EQCR) Checklist: Independent review of significant judgments made during the audit.

📝 Phase 6: Reporting Phase (ISA 700, ISA 705, ISA 706)

Objective: Form the final audit opinion and issue the report.

· Auditor's Report Draft: Final unmodified or modified opinion (qualified, adverse, or disclaimer).

· Auditor's Report to Management (Management Letter): Formal communication of internal control deficiencies and improvement recommendations.

· Board of Directors' Meetings Agenda & Minutes: For board approval of audited accounts and the audit report.

· Communication with Those Charged with Governance (TCWG): Formal letters summarizing audit scope, significant findings, and accounting policies.

· Audit Report Verification Code (DVC): For statutory filings, the code generated from the ICAB Document Verification System (DVS).

📂 Phase 7: Post-Completion Phase (ISA 230)

Objective: Archive the audit file and retain it per standards.

· Final Audit File Assembly Index: Table of contents for the final audit file.

· Administrative Completion Checklist: Ensuring all audit documents are included and administrative tasks are complete.

· Audit Documentation Retention Log: Record of retention (min. 5-7 years post-audit report) and eventual destruction.

· FRC Audit Quality Review File (if selected): File for submission to the Financial Reporting Council for regulatory review.

To help visualize the document flow, here’s a simplified timeline:

1. Acceptance & Planning (Weeks 0-4) → 2. Risk Assessment (Weeks 4-6) → 3. Fieldwork (Weeks 6-14) → 4. Completion (Weeks 14-18) → 5. Reporting (Weeks 18-20) → 6. Assembly (Within 60 days of report) → 7. Retention (5-7 years)

I hope this comprehensive list is helpful for structuring your audit processes. If you'd like a deeper look into a specific phase or standard—like the detailed requirements of ISA 315 or the nuances of audit reporting in Bangladesh—feel free to let me know.

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 .