AUDIT NOTEBOOK

AUDIT NOTEBOOK

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NAME -ADITI KOLGEROLL NO -221440 SYBCOM C

MEANING

AN AUDIT NOTEBOOK IS A REGISTER KERT BY AN AUDIT TEAM TO RECORD CRUCIAL POINTS OBSERVED DURING AN AUDIT. IT CONTAINS NOTES MADE BY THE AUDIT TEAM FOR RECORDING SPECIAL POINTS OBSERVED DURING THE THR COURSE OF THE AUDIT.

IMPORTANCE

Importance of Audit Notebook 1. An audit notebook is pertinent for an auditor, particularly for the preparation of an audit report, which is to be submitted to the shareholders of the company. It is important because: 2. An auditor can use it as evidence when a charge of negligence is registered against the auditor. 3. It facilitates the auditor to know the actual volume of work performed by his/her audit staff. 4. It helps in future reference and acts as a guide to draft audit programs in the future, as the points noted down in the notebook highlights the loopholes in the accounting system of the client which must be considered. 5. It also helps the auditor for correlating the audit work if the related assistant is not present or the work is halted for the short term. 6. It also records different queries that came up during the audit and their state of disposal. Further, disposed of queries, explanations received, and evidence encountered, would be recorded and those queries which are not disposed of would be noted for follow-up.

CONTENTS OF AUDIT NOTEBOOK

There is a list of matters which the audit notebook incorporates, this includes: 1. List of account books that the client maintains. 2. Details of main officers, their powers, duties, and responsibilities. 3. Method of accounting adopted by the firm 4. Technical jargon used in business 5. Points that need more explanation. 6. Particulars of vouchers that are missing and duplicates are to be gathered. 7. Commencement and completion date of the audit 8. Any mistake, irregularity, or error identified during the audit.

OBJECTIVES OF AUDIT NOTEBOOK

• To facilitate future audit: Current year’s audit notebook facilitates the auditor when he commences audit in the subsequent year. It helps in understanding the areas requiring special consideration and attention.
• To provide documentary evidence: It acts as evidence concerning the extent of work performed and the level of skill and care employed by the auditor while carrying out an audit. He can use it as documentary evidence to defend himself when a charge of negligence is filed.
• To prepare audit report: It is quite obvious that the auditor cannot keep all the irregularities and important matters and audit findings, in his memory, which require consideration at the time of preparation of the audit report. Hence, if the auditor maintains an audit notebook, it helps in the preparation of the audit report
• To resolve queries arising at the time of audit: The client’s accounting staff may feel annoyed when the auditor comes up with queries before them on a frequent basis, during the course of the audit. And so, for the convenience of the client’s staff, audit queries must be noted down in the book whenever they arise and put before the staff for explanation altogether.
• To evaluate work: If the auditor goes through the audit notebook, it is easier to understand the progress of the audit work performed and the efficiency level of the audit staff..

ADVANTAGES

An audit notebook is an important document that notes down all the significant observations in audit and related queries. It, therefore, helps in knowing the amount of work that has been performed. Besides this, it offers many other benefits to the auditor, some of which are outlined below:

• Facilitation in audit work
• Preparation of report
• Evidence of work carried out

• Provides a reference for current as well as future audits
• Audit staff’s appraisal
• Fixing responsibility
• Adherence to Audit Programme

DISADVANTAGES

An audit notebook may also pose some challenges, including the following:

• It results in the development of a fault-finding mindset among the audit personnel.
• Keeping an audit notebook sometimes leads to misunderstandings between the client’s staff and the audit staff.
• It must be prepared with great care because as stated previously, it can serve as evidence in a Court of law. If not prepared with proper care, it may not protect the auditor from lawsuits filed against him for negligence in the discharge of his duties.
• Because the audit notebook is used as a reference in subsequent audits, any errors present in the book might get carried forward and could have a negative influence on the following audit.

WORKING PAPERS VS AUDIT NOTEBOOK

CONCEPT: WORKING PAPERS ARE A BROADER CONCEPT. IT INCLUDES AN AUDIT NOTEBOOK AS WELL AS THR PERMANENT FILE PREPARED BY: WHILE THE AUDIT NOTEBOOK IS PREPARED BY AUDIT ASSISTANTS; THE PERMANENT FILE MAY BE PREPARED BY THE SENIOR AUDITORS PERIOD: WHILE THE AUDIT NOTEBOOK IS PREPARED EVERY YEAR; THE PERMANENT FILE MAY BE PREPARED ONLY ONCE IN THE FIRST AUDIT SOURCE: WHILE THE AUDIT NOTEBOOK IS PREPARED NY AUDITOR HIMSELF; WORKING PAPERS MAY HAVE DOCUMENTS COMING FROM CLIENTS OR OUTSIDERS.

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