Following are several statements regarding accounting records or audit documentation.Which of the statements is correct?
A) Accounting records belong to the client.
B) Documentation of an auditor's understanding of client's internal control system is not necessary.
C) Audit documents may be regarded as a substitute for the client's accounting records.
D) The independent auditor may discard audit documents after two years.

Question

Quizplus · Accepted Answer

Accounting records belong to the client and are their property. The auditor has the responsibility to obtain sufficient appropriate audit evidence but does not have the right to retain or confiscate the client's accounting records.

B, C, and D are incorrect:
B - Documentation of an auditor's understanding of client's internal control system is necessary as per auditing standards and to plan the audit approach.
C - Audit documents cannot be regarded as a substitute for accounting records since they are two different sets of documents with different purposes.
D - The independent auditor must retain audit documentation for a minimum of five years, not two years.

Following Are Several Statements Regarding Accounting Records or Audit Documentation