AU-C 230 does not ask you to document everything. It asks for four specific things beyond the work itself: significant findings or issues with the conclusions and judgments (paragraph .08c), discussions of them with management and others (.11), how you addressed information that contradicts your conclusion (.12), and, in rare cases, the justification for departing from a requirement (.13). Reviewers and inspectors go to these first, because they show what the team thought, not just what it did.
This post sets out each requirement, what the application material counts as significant, and write-up examples. For the general workpaper format, see how to document audit procedures.
What is a significant finding or issue?
Paragraph .08c requires documentation of significant findings or issues arising during the audit, the conclusions reached, and the significant professional judgments made in reaching them. A10 says judging significance takes an objective analysis of the facts and circumstances, and lists examples:
- Matters on the selection, application and consistency of significant accounting practices, including disclosures: complex or unusual transactions, accounting estimates and uncertainties and the related management assumptions.
- Matters that give rise to significant risks.
- Results of audit procedures, including corrected and uncorrected misstatements, indicating the financial statements could be materially misstated or that the risk assessment and responses need revising.
- Circumstances that cause significant difficulty in applying necessary procedures.
- Findings that could lead to a modified opinion or an emphasis-of-matter paragraph.
A11 adds the scaling rule: the more professional judgment involved, the more the documentation should explain the conclusion and the judgment. A12 gives situations where judgment documentation is appropriate, including the basis for concluding that management's subjective judgments are reasonable and the basis for evaluating whether an accounting estimate and its disclosures are reasonable or misstated.
Where should it live?
A13 says the auditor may find it helpful to keep a summary, sometimes called a completion memorandum, describing the significant findings or issues and how they were addressed, or cross-referencing the supporting documentation. It also says preparing the summary helps the auditor consider whether any individual AU-C section objective cannot be achieved, which would prevent achieving the overall objectives. Under AU-C it is optional; under PCAOB AS 1215.13 an engagement completion document is required. See audit completion memo contents.
How do I document discussions with management?
Paragraph .11 requires you to document discussions of significant findings or issues with management, those charged with governance and others, including the nature of the matters discussed, and when and with whom the discussions took place.
A16 says the documentation need not be your own memo. Minutes of a meeting prepared by entity personnel can be used if you recognize them as an appropriate summary of the meeting. Others include other entity personnel and external parties such as persons giving professional advice to the entity.
Sample write-up
Matter: Revenue on the multi-year maintenance contract (significant risk). Management's position was that revenue should be recognized on delivery of the annual license key.
Discussed: March 3, 2027, with the controller (name) and CFO (name), by videoconference, 45 minutes. We explained that the contract terms provide continuous access and support through the term, which indicates ratable recognition. Management agreed to record an adjustment of $184,000 to defer revenue.
Outcome: Entry posted March 5, 2027 (reference). Agreed to the revised trial balance. Conclusion: revenue is fairly stated as adjusted.
It names the people, gives the date, states the matter and records the outcome. The figures are illustrative.
What if the evidence contradicts my conclusion?
Paragraph .12 applies when you identified information that is inconsistent with your final conclusion on a significant finding or issue. You document how you addressed the inconsistency. A18 says that may include the procedures performed in response to the information and documentation of consultations on, or resolutions of, differences in professional judgment among engagement team members or between the team and others consulted.
A17 limits the burden: the requirement does not mean keeping documentation that is incorrect or superseded. A6 likewise says drafts, incomplete notes, earlier copies corrected for typographical errors and duplicates need not be included.
The reason this matters shows in A9. In the discussion of professional skepticism, the application material says documentation can show it where audit evidence includes items that both corroborate and contradict management's assertions, by recording how the auditor evaluated that evidence and the judgments made.
Sample write-up
Conclusion: Allowance for credit losses of $212,000 is reasonable.
Contradictory information: A customer representing 18 percent of year-end receivables told us on February 22, 2027, by email, that it disputes two invoices totaling $96,000. Management's allowance model had no specific reserve for this customer.
Response: Obtained the dispute correspondence; the credit memo was issued March 8, 2027; management recorded a specific reserve and revised the allowance to $308,000 (+$96,000). Reperformed the model. No further inconsistent information noted in subsequent receipts testing through March 19, 2027.
Resolution: Conclusion revised to the adjusted balance.
Check the arithmetic: $212,000 plus $96,000 is $308,000. Note that the write-up keeps the contradiction and the resolution, not the first draft of the conclusion.
When may I depart from a requirement?
Paragraph .13 applies when, in rare circumstances, you judge it necessary to depart from a relevant presumptively mandatory requirement (as defined in section 200, paragraph .26). You must document the justification for the departure and how the alternative audit procedures performed were sufficient to achieve the intent of the requirement.
A21 sets expectations: other than in rare circumstances, GAAS call for compliance with each relevant requirement. A22 says a requirement is not relevant only when the AU-C section is not relevant (for example, no internal audit function means nothing in section 610 applies) or the requirement is conditional and the condition does not exist (for example, no inability to obtain evidence means the requirement to modify the opinion does not apply). In those cases there is no departure to document.
A departure write-up has four parts: the requirement and its intent, why the required procedure could not be performed or would have been ineffective, the alternative procedures, and why they achieved the intent. A workpaper that says "not applicable" for a relevant requirement is not a departure document and will be treated as a missed procedure.
Matters after the report date
Paragraph .14 applies if, in rare circumstances, you perform new or additional procedures or draw new conclusions after the date of the auditor's report. You document the circumstances, the new procedures, evidence and conclusions and their effect on the report, and when and by whom the changes were made and reviewed. The mechanics are in documentation completion date and post-release file changes.
Which other sections add their own documentation?
A30 lists the other AU-C paragraphs with documentation requirements, such as section 240 paragraphs .43 to .46 on fraud, section 450 paragraph .12 on misstatements, section 540 paragraph .38 on estimates and section 570 paragraph .22 on going concern. The specific requirements do not limit AU-C 230 (paragraph .01). For the misstatement schedule, see uncorrected misstatements and the sum schedule.
Frequently asked questions
Is an issues memo required for a small audit?
AU-C 230 does not require a separate memo. It requires the significant findings, discussions and judgments to be documented, and A20 says a smaller audit can record several aspects in a single document with cross-references.
Can I explain the judgment orally to the inspector?
A7 says oral explanations alone are not adequate support, though they can clarify what the documentation already says.
Do I need to keep my first draft conclusion?
No, unless it reflects information inconsistent with the final conclusion that you had to address (A17).
Sources
- AICPA, AU-C Section 230, Audit Documentation (paragraphs .01, .08, .11 to .14, A6, A7, A9 to A13, A16 to A22, A30): https://www.aicpa-cima.com/resources/landing/aicpa-professional-standards
- PCAOB, AS 1215, Audit Documentation (paragraphs .12 and .13, issuer counterpart on significant findings and the engagement completion document): https://pcaobus.org/oversight/standards/auditing-standards/details/AS1215
CORAA prepares ready-to-review audit files for US CPA firms from client books; you review and sign. See /us.
Part of CORAA University · Evidence and audit procedures: related guides, calculators and templates.
AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error