Current Audit File (CAF):
This file will contain matters only relevant to the current year‘s audit only. It will contain:
- A copy of the accounts being audited signed by the directors;
- A file index showing the contents of the file;
- A description of the internal control system inform of questionnaires, flowcharts or forms of documentation;
- Audit programmes showing the audit objectives and planned audit procedures for each of the areas to be audited;
- A schedule of each item in the balance sheet. Each schedule should show:
– Balance at the beginning of the year, changes during the year and balance at the end of the year.
– Details of work performed on each balance, results and the conclusions made
- A schedule for each item in the profit and loss account showing the audit work carried out, results obtained and the conclusion reached;
- Check list for compliance with statutory disclosure requirements and accounting standards;
- Record of queries raised during the audit and coming forward from previous audit.
- Schedule of important statistics e.g. output, net profit margin, gross profit margin, sales composition, liquidity ratios;
- A record or abstract from the minutes of:
– The company
– The directors
– Any internal committee of the company whose deliberations are important to the auditor.
- The management letter setting out weaknesses in the internal control;
Letters of representation obtained from the client‘s management.
Permanent Audit File (PAF):
The permanent file usually contains documents and matters of continuing importance, which are required for more than one financial period. Information contained in a PAF include:
- Statutory material: governing the conduct of the audit e.g. for companies, the Companies Act (Cap 486). For a quoted company a copy of the Nairobi Stock Exchange regulations (NSE) is required.
- Rules and regulations of the enterprise. E.g. for a company, the Memorandum and Articles of Association. For a partnership, a partnership agreement.
- Copies of documents of continuing importance and relevance to the auditor. -Letter of engagement and minutes of appointment of the auditor.
– Trade license.
– Debenture deeds.
– Lease agreements
– Guarantees and indemnities entered into.
- Addresses of the registered office and all other premises with a short description of the work carried on at each.
- An organisation chart showing: –
– Principal departments and subdivision thereof.
– Names of responsible officials showing lines of responsibility.
- A list of directors their shareholdings and service contracts;
- A list of company‘s advisors, bankers, stockbrokers, solicitors, valuers.