Auditing and Assurance Standards Council

Philippine Standard on Auditing 230 (Revised)

AUDIT DOCUMENTATION
Conforming Amendments
PSA 200, Objective and General Principles Governing an Audit of
Financial Statements
PSA 330, The Auditors Procedures in Response to Assessed Risks
PSQC 1, Quality Control for Firms that Perform Audits and
Reviews of Historical Financial Information and Other Assurance
and Related Services Engagements

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PSA 230 (Revised)

PHILIPPINE STANDARD ON AUDITING 230 (REVISED)

AUDIT DOCUMENTATION
(Effective for audits of financial information for
periods beginning on or after June 15, 2006)

CONTENTS
Paragraph

Introduction .
Definitions

1-5
6

Nature of Audit Documentation .

7-8

Form, Content and Extent of Audit Documentation ..

9-24

Documentation of the Identifying Characteristics of Specific

Items or Matters Being Tested . 12-13
Significant Matters 14-19
Documentation of Departures from Basic Principles or
Essential Procedures . 20-22
Identification of Preparer and Reviewer ... 23-24
Assembly of the Final Audit File ... 25-30
Changes to Audit Documentation in Exceptional Circumstances after
the Date of the Auditors Report 31-32
Effective Date 33-34
Acknowledgment ... 35-36

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PSA 230 (Revised)

Appendix: Specific Audit Documentation Requirements and Guidance in Other PSAs

Philippine Standard on Auditing (PSA) 230 (Revised), Audit Documentation,

should be read in the context of the Preface to the Philippine Standards on Quality
Control, Auditing, Assurance and Related Services, which sets out the
application and authority of PSAs.

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PSA 230 (Revised)

Audit Documentation
Introduction
1.

The purpose of this Philippine Standard on Auditing (PSA) is to establish

standards and provide guidance on audit documentation. The Appendix lists other
PSAs containing subject matter-specific documentation requirements and
guidance. Laws or regulations may establish additional documentation
requirements.

2.

The auditor should prepare, on a timely basis, audit documentation that

provides:
(a)

A sufficient and appropriate record of the basis for the auditors

report; and

(b)

Evidence that the audit was performed in accordance with PSAs and
applicable legal and regulatory requirements.

3.

Preparing sufficient and appropriate audit documentation on a timely basis helps

to enhance the quality of the audit and facilitates the effective review and
evaluation of the audit evidence obtained and conclusions reached before the
auditors report is finalized. Documentation prepared at the time the work is
performed is likely to be more accurate than documentation prepared
subsequently.

4.

Compliance with the requirements of this PSA together with the specific
documentation requirements of other relevant PSAs is ordinarily sufficient to
achieve the objectives in paragraph 2.

5.

In addition to these objectives, audit documentation serves a number of purposes,

including:
(a)

Assisting the audit team to plan and perform the audit;

(b)

Assisting members of the audit team responsible for supervision to direct

and supervise the audit work, and to discharge their review responsibilities
in accordance with PSA 220 (Revised), Quality Control for Audits of
Historical Financial Information;

(c)

Enabling the audit team to be accountable for its work;

(d)

Retaining a record of matters of continuing significance to future audits;

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PSA 230 (Revised)

(e)

Enabling an experienced auditor to conduct quality control reviews and

inspections1 in accordance with PSQC 1, Quality Control for Firms that
Perform Audits and Reviews of Historical Financial Information, and
Other Assurance and Related Services Engagements; and

(f)

Enabling an experienced auditor to conduct external inspections in

accordance with applicable legal, regulatory or other requirements.

Definitions
6.

In this PSA:
(a)

Audit documentation means the record of audit procedures performed,2

relevant audit evidence obtained, and conclusions the auditor reached
(terms such as working papers or workpapers are also sometimes
used); and

(b)

Experienced auditor means an individual (whether internal or external to

the firm) who has a reasonable understanding of (i) audit processes, (ii)
PSAs and applicable legal and regulatory requirements, (iii) the business
environment in which the entity operates, and (iv) auditing and financial
reporting issues relevant to the entitys industry.

Nature of Audit Documentation

7.

Audit documentation may be recorded on paper or on electronic or other media. It

includes, for example, audit programs, analyses, issues memoranda, summaries of
significant matters, letters of confirmation and representation, checklists, and
correspondence (including e-mail) concerning significant matters. Abstracts or
copies of the entitys records, for example, significant and specific contracts and
agreements, may be included as part of audit documentation if considered
appropriate. Audit documentation, however, is not a substitute for the entitys
accounting records. The audit documentation for a specific audit engagement is
assembled in an audit file.

8.

The auditor ordinarily excludes from audit documentation superseded drafts of

working papers and financial statements, notes that reflect incomplete or
preliminary thinking, previous copies of documents corrected for typographical or
other errors, and duplicates of documents.

As defined in PSA 220 (Revised).

Audit procedures performed include audit planning, as addressed in PSA 300, Planning an Audit of
Financial Statements.

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PSA 230 (Revised)

Form, Content and Extent of Audit Documentation

9.

10.

The auditor should prepare the audit documentation so as to enable an experienced

auditor, having no previous connection with the audit, to understand:

(a)

The nature, timing, and extent of the audit procedures performed to

comply with PSAs and applicable legal and regulatory requirements;

(b)

The results of the audit procedures and the audit evidence obtained; and

(c)

Significant matters arising during the audit and the conclusions reached
thereon.

The form, content and extent of audit documentation depend on factors such as:

The nature of the audit procedures to be performed;

The identified risks of material misstatement;

The extent of judgment required in performing the work and evaluating the
results;

The significance of the audit evidence obtained;

The nature and extent of exceptions identified;

The need to document a conclusion or the basis for a conclusion not readily
determinable from the documentation of the work performed or audit
evidence obtained; and

The audit methodology and tools used.

It is, however, neither necessary nor practicable to document every matter the
auditor considers during the audit.
11.

Oral explanations by the auditor, on their own, do not represent adequate support
for the work the auditor performed or conclusions the auditor reached, but may be
used to explain or clarify information contained in the audit documentation.

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PSA 230 (Revised)

Documentation of the Identifying Characteristics of Specific Items or Matters Being

Tested
12.

In documenting the nature, timing and extent of audit procedures performed, the
auditor should record the identifying characteristics of the specific items or
matters being tested.

13.

Recording the identifying characteristics serves a number of purposes. For

example, it enables the audit team to be accountable for its work and facilitates
the investigation of exceptions or inconsistencies. Identifying characteristics will
vary with the nature of the audit procedure and the item or matter being tested.
For example:

For a detailed test of entity-generated purchase orders, the auditor may

identify the documents selected for testing by their dates and unique
purchase order numbers.

For a procedure requiring selection or review of all items over a specific

amount from a given population, the auditor may record the scope of the
procedure and identify the population (for example, all journal entries over
a specified amount from the journal register).

For a procedure requiring systematic sampling from a population of

documents, the auditor may identify the documents selected by recording
their source, the starting point and the sampling interval (for example, a
systematic sample of shipping reports selected from the shipping log for
the period from April 1 to September 30, starting with report number
12345 and selecting every 125th report).

For a procedure requiring inquiries of specific entity personnel, the auditor

may record the dates of the inquiries and the names and job designations
of the entity personnel.

For an observation procedure, the auditor may record the process or

subject matter being observed, the relevant individuals, their respective
responsibilities, and where and when the observation was carried out.

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PSA 230 (Revised)

Significant Matters
14.

Judging the significance of a matter requires an objective analysis of the facts and
circumstances. Significant matters include, amongst others:

Matters that give rise to significant risks (as defined in PSA 315,
Understanding the Entity and its Environment and Assessing the Risks of
Material Misstatement).

Results of audit procedures indicating (a) that the financial information

could be materially misstated, or (b) a need to revise the auditors previous
assessment of the risks of material misstatement and the auditors
responses to those risks.

Circumstances that cause the auditor significant difficulty in applying

necessary audit procedures.

Findings that could result in a modification to the auditors report.

15.

The auditor may consider it helpful to prepare and retain as part of the audit
documentation a summary (sometimes known as a completion memorandum) that
describes the significant matters identified during the audit and how they were
addressed, or that includes cross-references to other relevant supporting audit
documentation that provides such information. Such a summary may facilitate
effective and efficient reviews and inspections of the audit documentation,
particularly for large and complex audits. Further, the preparation of such a
summary may assist the auditors consideration of the significant matters.

16.

The auditor should document discussions of significant matters with management

and others on a timely basis.

17.

The audit documentation includes records of the significant matters discussed,

and when and with whom the discussions took place. It is not limited to records
prepared by the auditor but may include other appropriate records such as agreed
minutes of meetings prepared by the entitys personnel. Others with whom the
auditor may discuss significant matters include those charged with governance,
other personnel within the entity, and external parties, such as persons providing
professional advice to the entity.

18.

If the auditor has identified information that contradicts or is inconsistent with the
auditors final conclusion regarding a significant matter, the auditor should
document how the auditor addressed the contradiction or inconsistency in forming
the final conclusion.

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19.

PSA 230 (Revised)

The documentation of how the auditor addressed the contradiction or

inconsistency, however, does not imply that the auditor needs to retain
documentation that is incorrect or superseded.

Documentation of Departures from Basic Principles or Essential Procedures

20.

The basic principles and essential procedures in PSAs are designed to assist the
auditor in meeting the overall objective of the audit. Accordingly, other than in
exceptional circumstances, the auditor complies with each basic principle and
essential procedure that is relevant in the circumstances of the audit.

21.

Where, in exceptional circumstances, the auditor judges it necessary to depart

from a basic principle or an essential procedure that is relevant in the
circumstances of the audit, the auditor should document how the alternative audit
procedures performed achieve the objective of the audit, and, unless otherwise
clear, the reasons for the departure. This involves the auditor documenting how
the alternative audit procedures performed were sufficient and appropriate to
replace that basic principle or essential procedure.

22.

The documentation requirement does not apply to basic principles and essential
procedures that are not relevant in the circumstances, i.e., where the
circumstances envPSAged in the specified basic principle or essential procedure
do not apply. For example, in a continuing engagement, nothing in PSA 510,
Initial EngagementsOpening Balances, is relevant. Similarly, if a PSA
includes conditional requirements, they are not relevant if the specified conditions
do not exist (for example, the requirement to modify the auditors report where
there is a limitation of scope).

Identification of Preparer and Reviewer

23.

In documenting the nature, timing and extent of audit procedures

performed, the auditor should record:
(a)

Who performed the audit work and the date such work was
completed; and

(b)

Who reviewed the audit work performed and the date and extent of such
review.3

Paragraph 26 of PSA 220 (Revised) establishes the requirement for the auditor to review the audit work
performed through review of the audit documentation, which involves the auditor documenting the extent
and timing of the reviews. Paragraph 25 of PSA 220 (Revised) describes the nature of a review of work
performed.

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24.

PSA 230 (Revised)

The requirement to document who reviewed the audit work performed does not
imply a need for each specific working paper to include evidence of review. The
audit documentation, however, evidences who reviewed specified elements of the
audit work performed and when.

Assembly of the Final Audit File

25.

The auditor should complete the assembly of the final audit file on a timely
basis after the date of the auditors report.

26.

PSQC 1 requires firms to establish policies and procedures for the timely
completion of the assembly of audit files. As PSQC 1 indicates, 60 days after the
date of the auditors report is ordinarily an appropriate time limit within which to
complete the assembly of the final audit file.

27.

The completion of the assembly of the final audit file after the date of the
auditors report is an administrative process that does not involve the performance
of new audit procedures or the drawing of new conclusions. Changes may,
however, be made to the audit documentation during the final assembly process if
they are administrative in nature. Examples of such changes include:

Deleting or discarding superseded documentation.

Sorting, collating and cross-referencing working papers.

Signing off on completion checklists relating to the file assembly process.

Documenting audit evidence that the auditor has obtained, discussed and
agreed with the relevant members of the audit team before the date of the
auditors report.

28.

After the assembly of the final audit file has been completed, the auditor should
not delete or discard audit documentation before the end of its retention period.

29.

PSQC 1 requires firms to establish policies and procedures for the retention of
engagement documentation. As PSQC 1 indicates, the retention period for audit
engagements ordinarily is no shorter than five years from the date of the auditors
report, or, if later, the date of the group auditors report.

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30.

PSA 230 (Revised)

When the auditor finds it necessary to modify existing audit documentation

or add new audit documentation after the assembly of the final audit file has
been completed, the auditor should, regardless of the nature of the
modifications or additions, document:
(a)

When and by whom they were made, and (where applicable) reviewed;

(b)

The specific reasons for making them; and

(c)

Their effect, if any, on the auditors conclusions.

Changes to Audit Documentation in Exceptional Circumstances after

the Date of the Auditors Report
31.

32.

When exceptional circumstances arise after the date of the auditors report that
require the auditor to perform new or additional audit procedures or that lead the
auditor to reach new conclusions, the auditor should document:
(a)

The circumstances encountered;

(b)

The new or additional audit procedures performed, audit evidence

obtained, and conclusions reached; and

(c)

When and by whom the resulting changes to audit documentation were

made, and (where applicable) reviewed.

Such exceptional circumstances include the discovery of facts regarding the

audited financial information that existed at the date of the auditors report that
might have affected the auditors report had the auditor then been aware of them.

Effective Date
33.

This PSA is effective for audits of financial information for periods beginning on
or after June 15, 2006.

34.

PSA 230, Documentation, approved by the Auditing Standards and Practices

Council in 2001 will be withdrawn in June 2006 when PSA 230 (Revised)
becomes effective.

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PSA 230 (Revised)

Acknowledgment
35.

This PSA is based on International Standard on Auditing (ISA) 230 (Revised),

Audit Documentation, issued by the International Auditing and Assurance
Standards Board.

36.

There are no significant differences between this PSA and ISA 230 (Revised).

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PSA 230 (Revised)

Appendix

Specific Audit Documentation Requirements and Guidance

in Other PSAs
The following lists the main paragraphs that contain specific documentation requirements
and guidance in other PSAs:

PSA 210, Terms of Audit EngagementsParagraph 5;

PSA 220 (Revised), Quality Control for Audits of Historical Financial

InformationParagraphs 1114, 16, 25, 27, 30, 31 and 33;

PSA 240, The Auditors Responsibility to Consider Fraud in an Audit of

Financial StatementsParagraphs 60 and 107111;

PSA 250, Consideration of Laws and RegulationsParagraph 28;

PSA 260, Communication of Audit Matters with Those Charged with

GovernanceParagraph 16;

PSA 300, Planning an Audit of Financial StatementsParagraphs 22-26;

PSA 315, Understanding the Entity and its Environment and Assessing the
Risks of Material MisstatementParagraphs 122 and 123;

PSA 330, The Auditors Procedures in Response to Assessed Risks

Paragraphs 73 and 74;

PSA 505, External ConfirmationsParagraph 33;

PSA 580, Management RepresentationsParagraph 10; and

PSA 600, Using the Work of Another AuditorParagraph 14.

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PSA 230 (Revised)

Conforming Amendments to PSA 200, PSA 330 and PSQC 1

as a Result of PSA 230 (Revised)
PSA 200, Objective and General Principles Governing an Audit of
Financial Statements
The following sentences are inserted at the end of paragraph 14:
The auditor may, in exceptional circumstances, judge it necessary to depart from a basic
principle or an essential procedure that is relevant in the circumstances of the audit, in
order to achieve the objective of the audit. In such a case, the auditor is not precluded
from representing compliance with PSAs, provided the departure is appropriately
documented as required by PSA 230, Audit Documentation.
This amendment is effective for audits of financial statements for periods beginning on or
after June 15, 2006.

PSA 330, The Auditors Procedures in Response to Assessed Risks

The following paragraphs in PSA 330 are amended as marked:
50.

The auditors substantive procedures should include the following audit

procedures related to the financial statement closing process:

Agreeing or reconciling the financial statements with the underlying

accounting records; and

Examining material journal entries and other adjustments made during the
course of preparing the financial statements.

The nature and extent of the auditors examination of journal entries and other
adjustments depends on the nature and complexity of the entitys financial reporting
process and the associated risks of material misstatement.

Deleted: to

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PSA 230 (Revised)

Conforming Amendments

73.

The auditor should document the overall responses to address the assessed risks of
material misstatement at the financial statement level and the nature, timing, and
extent of the further audit procedures, the linkage of those procedures with the
assessed risks at the assertion level, and the results of those audit procedures,
including the conclusions where these are not otherwise clear. In addition, if the
auditor plans to use audit evidence about the operating effectiveness of controls
obtained in prior audits, the auditor should document the conclusions reached
with regard to relying on such controls that were tested in a prior audit.

The following paragraphs are added to PSA 330:

73a.

The auditors documentation should demonstrate that the financial statements

agree or reconcile with the underlying accounting records.

73b.

The manner in which the matters referred to in paragraphs 73 and 73a are
documented is based on the auditors professional judgment. PSA 230 (Revised),
Audit Documentation establishes standards and provides guidance regarding
documentation in the context of the audit of financial statements.

These amendments to PSA 330 are effective for audits of financial statements for periods
beginning on or after June 15, 2006.

PSQC 1, Quality Control for Firms that Perform Audits and Reviews
of Historical Financial Information and Other Assurance and Related
Services Engagements
The following definition is added to PSQC 1:
6.

(a)

Engagement documentationthe record of work performed, results

obtained, and conclusions the practitioner reached (terms such as
working papers or workpapers are sometimes used). The
documentation for a specific engagement is assembled in an
engagement file;

Existing subparagraphs (a)-(o) of paragraph 6 will be renumbered accordingly.

Deleted: The manner in which these

matters are documented is based on the
auditors professional judgment. PSA
230, Documentation, establishes
standards and provides guidance
regarding documentation in the context of
the audit of financial statements.

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PSA 230 (Revised)

Conforming Amendments

The following new subheader and paragraphs are added to PSQC 1 as a subsection within
the Engagement Performance section, after paragraph 73.
Engagement Documentation
Completion of the Assembly of Final Engagement Files
73a.

The firm should establish policies and procedures for engagement teams to
complete the assembly of final engagement files on a timely basis after the
engagement reports have been finalized.

73b.

Law or regulation may prescribe the time limits by which the assembly of final
engagement files for specific types of engagement should be completed. Where
no such time limits are prescribed in law or regulation, the firm establishes time
limits appropriate to the nature of the engagements that reflect the need to
complete the assembly of final engagement files on a timely basis. In the case of
an audit, for example, such a time limit is ordinarily not more than 60 days after
the date of the auditors report.

73c.

Where two or more different reports are issued in respect of the same subject
matter information of an entity, the firms policies and procedures relating to time
limits for the assembly of final engagement files address each report as if it were
for a separate engagement. This may, for example, be the case when the firm
issues an auditors report on a components financial information for group
consolidation purposes and, at a subsequent date, an auditors report on the same
financial information for statutory purposes.

Confidentiality, Safe Custody, Integrity, Accessibility and Retrievability of Engagement

Documentation
73d.

The firm should establish policies and procedures designed to maintain the
confidentiality, safe custody, integrity, accessibility and retrievability of
engagement documentation.

73e.

Relevant ethical requirements establish an obligation for the firms personnel to

observe at all times the confidentiality of information contained in engagement
documentation, unless specific client authority has been given to disclose
information, or there is a legal or professional duty to do so. Specific laws or
regulations may impose additional obligations on the firms personnel to maintain

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PSA 230 (Revised)

Conforming Amendments

client confidentiality, particularly where data of a personal nature are concerned.

73f.

73g.

Whether engagement documentation is in paper, electronic or other media, the

integrity, accessibility or retrievability of the underlying data may be
compromised if the documentation could be altered, added to or deleted without
the firms knowledge, or if it could be permanently lost or damaged.
Accordingly, the firm designs and implements appropriate controls for
engagement documentation to:
(a)

Enable the determination of when and by whom engagement

documentation was created, changed or reviewed;

(b)

Protect the integrity of the information at all stages of the engagement,

especially when the information is shared within the engagement team or
transmitted to other parties via the Internet;

(c)

Prevent unauthorized changes to the engagement documentation; and

(d)

Allow access to the engagement documentation by the engagement team

and other authorized parties as necessary to properly discharge their
responsibilities.

Controls that the firm may design and implement to maintain the confidentiality,
safe custody, integrity, accessibility and retrievability of engagement
documentation include, for example:

The use of a password among engagement team members to restrict access

to electronic engagement documentation to authorized users.

Appropriate back-up routines for electronic engagement documentation at

appropriate stages during the engagement.

Procedures for properly distributing engagement documentation to the

team members at the start of engagement, processing it during
engagement, and collating it at the end of engagement.

Procedures for restricting access to, and enabling proper distribution and
confidential storage of, hardcopy engagement documentation.

Paragraph 4.2 of Part A of the Code of Ethics for Professional Accountants in the Philippines, issued by
the Philippine Institute of Certified Public Accountants and adopted and implemented by the Board of
Accountancy, requires the auditor to observe at all times the confidentiality of information contained in
audit documentation, unless specific authority has been given to disclose information, or there is legal or
professional duty to do so.

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PSA 230 (Revised)

Conforming Amendments

73h.

For practical reasons, original paper documentation may be electronically scanned

for inclusion in engagement files. In that case, the firm implements appropriate
procedures requiring engagement teams to:
(a)

Generate scanned copies that reflect the entire content of the original
paper documentation, including manual signatures, cross-references and
annotations;

(b)

Integrate the scanned copies into the engagement files, including indexing
and signing off on the scanned copies as necessary; and

(c)

Enable the scanned copies to be retrieved and printed as necessary.

The firm considers whether to retain original paper documentation that has been
scanned for legal, regulatory or other reasons.
Retention of Engagement Documentation
73i.

The firm should establish policies and procedures for the retention of engagement
documentation for a period sufficient to meet the needs of the firm or as required
by law or regulation.

73j.

The needs of the firm for retention of engagement documentation, and the period
of such retention, will vary with the nature of the engagement and the firms
circumstances, for example, whether the engagement documentation is needed to
provide a record of matters of continuing significance to future engagements. The
retention period may also depend on other factors, such as whether local law or
regulation prescribes specific retention periods for certain types of engagements,
or whether there are generally accepted retention periods in the jurisdiction in the
absence of specific legal or regulatory requirements. In the specific case of audit
engagements, the retention period ordinarily is no shorter than five years from the
date of the auditors report, or, if later, the date of the group auditors report.

73k.

Procedures that the firm adopts for retention of engagement documentation

include those that:

Enable the retrieval of, and access to, the engagement documentation
during the retention period, particularly in the case of electronic
documentation since the underlying technology may be upgraded or
changed over time.

Provide, where necessary, a record of changes made to engagement

documentation after the engagement files have been completed.

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PSA 230 (Revised)

Conforming Amendments

Enable authorized external parties to access and review specific

engagement documentation for quality control or other purposes.

Ownership of Engagement Documentation

73l.

Unless otherwise specified by law or regulation, engagement documentation is the

property of the firm. The firm may, at its discretion, make portions of, or extracts
from, engagement documentation available to clients, provided such disclosure
does not undermine the validity of the work performed, or, in the case of
assurance engagements, the independence of the firm or its personnel.

These amendments to PSQC 1 are effective beginning June 15, 2006.

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PSA 230 (Revised)

This PSA 230 (Revised) was unanimously approved for adoption in the Philippines on
December 5, 2005 by the members of the Auditing Standards and Practices Council:

Benjamin R. Punongbayan, Chairman

Antonio P. Acyatan, Vice Chairman

Felicidad A. Abad

David L. Balangue

Eliseo A. Fernandez

Nestorio C. Roraldo

Joaquin P. Tolentino

Editha O. Tuason

Joycelyn J. Villaflores

Horace F. Dumlao

Ester F. Ledesma

Manuel O. Faustino

Erwin Vincent G. Alcala

Froilan G. Ampil

Eugene T. Mateo

Flerida V. Creencia

Roberto G. Manabat