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What is audit documentation and why is it important

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Reference no: EM13886978

In August 2011, the PCAOB barred two former Ernst & Young LLP (E&Y) employees from auditing public companies, alleging they provided misleading documents to PCAOB inspectors who were evaluating the audit firm's work. One partner was barred for three years, and a senior manager was barred for two years.

The PCAOB said that shortly before its inspectors were to inspect an E&Y audit of an unidentified company, the two auditors created, backdated, and placed in the audit files a document concerning the valuation of one of the audit client's investments. One of the auditors allegedly authorized other mem- bers of the audit team to alter other working papers in advance of the inspection. The changes were not disclosed to the PCAOB.

E&Y indicated that the conduct of the two auditors had no impact on the client's financial statements or on E&Y's audit conclusions.

a. What is audit documentation, and why is it important to a quality audit?

b. Given that the conduct of the two auditors had no impact on the client's financial statements or on E&Y's conclusions, why

Reference no: EM13886978

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