What are Permanent Audit Files?
A permanent audit file is a set of records that is intended to be accessed for repeated use in successive audits. It is an important tool for external auditors, allowing them to easily access relevant information for each audit.
The permanent audit file is comprised of documents, such as financial statements, tax returns, and other key documents, that are collected in order to assist the audit team in their tasks. This file allows the audit team to track changes in the business over time and compare the current financial status to the past. The permanent audit file also includes records of any accounting policies, procedures, and internal controls that are relevant to the audit.
In addition, the permanent audit file can provide key evidence to support audit findings. As the audit progresses, the audit team can refer back to the file in order to review the documents and data that were collected in the past. This can help to ensure that the audit report is accurate and reliable.
The permanent audit file is an essential part of the auditing process and helps to ensure that the audit is conducted in an effective and efficient manner.
Permanent Audit File Contain
The contents of the permanent record should include all relevant documents necessary for an audit. This includes:
- Memorandum and article of association for an audit client
- Engagement letter
- Client acceptance risk assessment form
- Accounting manual and comprehensive risk assessment manual adopted by the client
- Opening accounts signed by previous auditors
- Documents related to leasehold land, major sales agreement, major purchase agreement, licenses, and regulatory permission
- System notes and assessment of initial risk
- Copy of agreement with shareholders
- Accounting policies implemented by the client
- Listing documents with stock exchange (if applicable)
- Firm’s assessment of independence with the audit client.
The permanent audit file must contain all of the above documents and information to ensure accuracy and completeness of the audit process.
Permanent Audit File Vs Current Audit File
Comparing two types of audit files reveals key differences in their purpose and contents.
The current audit file contains documents related to the current year only. It includes documents that are specifically relevant for the ongoing audit process. This file is designed to provide a snapshot of the current audit and is not intended for long-term use.
On the other hand, the permanent audit file contains documents that are relevant for future audits. It serves as a comprehensive collection of audit documents that can be used for reference in subsequent audits. This file includes documents with long-term relevance, such as leasehold land records. These documents are important for tracking and verifying assets over time.
Additionally, the permanent audit file includes an initial risk assessment. This assessment is used as a foundation for future audits and helps auditors identify areas of potential risk. By keeping this assessment in the permanent audit file, auditors can refer back to it in subsequent audits to ensure consistency and accuracy.
Furthermore, service invoices are placed in the permanent audit file. This allows auditors to track fees and maintain control over financial records. By keeping a record of these invoices, auditors can easily reference and verify financial transactions during future audits.
Conclusion
The permanent audit file is a critical document which contains vital information about the financial position of an entity. It is an important tool for auditors as it provides details of an entity’s financial activities for a specified period of time.
The permanent audit file contains all records which are necessary for the purpose of auditing and should be retained for an extended period of time. It is important to note that the permanent audit file is distinct from the current audit file as the latter is used to store documents related to the current audit year.
Thus, the permanent audit file is a fundamental part of the auditing process and should be maintained to ensure accuracy and completeness of the audit.