For all audit engagments, documentation must evidence compliance with the requirements of applicable SASs. Because SASs are written to be applicable to audit engagements of all sizes, compliance for a small audit engagement will likely be different than for a large audit. Audit documentation of compliance, therefore, is also likely to be different.
As we begin to think outside the box in planning, performing and documenting small audits, a CPA firm's quality control document must give the engagement executive the authority to make modifications that are tailored to the nature, size and complexity of a small entity. Our next step is to develop alternative documentation for use on our small audits.
In a December, 2009 article in the Journal of Accountancy entitled "Risk-Based Audit Best Practices" by Michael Ramos, CPA (a must read for all auditors!), this statement stands out:
"Once thought to be the purview of only the largest firms, growing numbers of audit firms are developing a more customized, firm-specific set of audit practice aids by creating their own forms or checklists for highly judgmental areas such as the documentation of internal controls."
Particularly on small audits, auditors can no longer afford to simply use all the practice aids of a major publisher! There are many ways to comply with quality control and auditing standards. Common sense and analytical thinking has always been a key to performing high-quality, highly-efficient audits and it still is today! With the increasing standards overload, CPA firms must begin to plan and use key audit documentation relative to the nature, size and complexity of an entity.
On December 23, 2009 I'm presenting a webcast on CPE Link, co-sponsored by AccountingWEB, entitled "Using Only Key Forms and the Most Efficient Documentation." In this webcast, I'll present an illustrative small audits alternative documentation plan which can be integrated with practice aids of major publishers. Participants in this webcast will receive beta copies of forms under development for my Small Audits Handbook along with written suggestions for their use. This webcast could be an auditor's greatest gift this holiday season! You can register on my instructor's page at www.cpelink.com. I hope to see you there!