What is a permanent file in audit?

In the case of recurring audits, some working paper files may be classified as permanent audit files which are updated currently with information of continuing importance to succeeding audit, as distinct from current audit files which contain information relating primarily to the audit of a single period.

A permanent audit file normally includes :

• Information concerning the legal and organizational structure of the entity. In the case of a company, this includes the Memorandum and Articles of Association. In the case of a statutory corporation, this includes the Act and Regulations under which the corporation functions.
• Extracts or copies of important legal documents, agreements and minutes relevant to the audit.
• A record of the study and the evaluation of the internal controls related to the accounting system. This might be in the form of narrative descriptions,questionnaires or flow charts, or some combination thereof.
• Copies of audited financial statements for previous years.
• Analysis of significant ratios and trends.
• Copies of management letters issued by the auditor, if any. Record of communication with the retiring auditor, if any, before acceptance of the appointment as auditor.
• Notes regarding significant accounting policies.
• Significant audit observations of earlier years.

The current file normally includes :

1. Correspondence relating to acceptance of annual reappointment.
2. Extracts of important matters in the minutes of Board Meetings and General Meetings as relevant to audit.
3. Evidence of the planning process of the audit and audit programme.
4. Analysis of transactions and balances.
5. A record of the nature, timing and extent of auditing procedures performed, and the results of such procedures.
6. Evidence that the work performed by assistants was supervised and reviewed.
7. Copies of communication with other auditors, experts and other third parties.
8. Letters of representation or confirmation received from the client.
9. Conclusions reached by the auditor concerning significant aspects of the audit, including the manner in which exceptions and unusual matters, if any, disclosed by the auditor’s procedures were resolved or treated.
10. Copies of the financial information being reported on and the related audit reports.

The engagement team should maintain a current file and permanent file for audit documentation. The permanent audit file would hold items that are important for this current year and future audits.

Examples include any incorporation documents, multi-year contracts, leases, pension plans, etc.

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The current audit file is used to store documentation that is applicable to the current year audit only. If the document will likely be needed in future audits, then the document should be placed in the permanent audit file.

The visual below illustrates the items that are commonly stored in the current file vs the permanent file.

Universal CPA Review created this excellent visual!

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You might also be interested in... What is the current audit file?

The audit team will need to maintain a current file and a permanent file. The current audit file is used to maintain audit documentation specific to the current year and would not necessarily be useful in future audits. This would include audit reports, financial statements, representation letters, etc.

What is the permanent audit file?

The engagement team should maintain a current file and permanent file for audit documentation. The permanent audit file would hold items that are important for this current year and future audits. Examples include any incorporation documents, multi-year contracts, leases, pension plans, etc.

What is permanent and current audit file?

What are the contents of the permanent audit file?

What are the types of audit files?

Which accounting data file is permanent?