An audit completion memo is the document where the engagement partner and the reviewer see the whole audit on a few pages: what was risky, what the team found, what was left uncorrected, and why the report says what it says. AU-C 230 calls it a summary, "sometimes known as a completion memorandum" (A13), and treats it as helpful but optional. PCAOB AS 1215.13 makes the equivalent, the engagement completion document, mandatory for issuer audits.
This post gives the memo's contents, where each part comes from in the standards, and a worked summary of uncorrected misstatements. The workpaper-level mechanics are in engagement completion checklist for the audit file, and the significant findings documentation rules are in AU-C 230 significant findings.
Why write one if AU-C does not require it?
A13 gives three reasons. The summary describes significant findings or issues and how they were addressed, or cross-references the supporting documentation. It may make reviews and inspections more effective and efficient, especially in large and complex audits. And preparing it can help the auditor consider whether any individual AU-C section objective cannot be achieved, which would prevent achieving the overall objectives.
It also serves as the reviewer's map. Under AS 1220.10e, the engagement quality reviewer reviews the engagement completion document and confirms with the partner that no significant unresolved matters remain. An EQR under SQMS 2 works from the same significant judgments, so a good memo shortens that review.
What goes in the memo?
Each section below ties to a source requirement. The memo does not repeat the workpapers; it states the conclusion and points to them.
1. Engagement facts
Client, period, framework, report type and date, materiality and the basis, engagement team, reviewer and EQR if any. Materiality should be the final figure after the reassessment AU-C 450.10 requires before evaluating uncorrected misstatements.
2. Significant risks and responses
List each significant risk, the response, the result and the workpaper reference. AU-C 330.30 requires documentation of the overall responses, the linkage of procedures to assessed risks at the assertion level, and the results including conclusions when not otherwise clear. For issuers, AS 1215.12f-1 lists significant risks and the results of the procedures performed in response as significant findings or issues. Include fraud risks and management override procedures from the fraud risk assessment.
3. Significant findings, judgments and consultations
Use the AU-C 230 A10 categories: significant accounting practices, estimates, unusual transactions, significant difficulties, matters that could modify the opinion. Record the discussions with management and when and with whom (paragraph .11), any inconsistent information and how it was resolved (.12), and consultations and their conclusions (AU-C 220 .41b).
4. Misstatements
Per AU-C 450.12, the file contains the amount below which misstatements are regarded as clearly trivial, all misstatements accumulated and whether corrected, and the conclusion on whether uncorrected misstatements are material, individually or in aggregate, with the basis. For issuers, AS 1215.12c adds the quantitative and qualitative factors considered. The schedule mechanics are in the SUM schedule.
5. Going concern
AU-C 570.32 requires documentation when conditions or events raise substantial doubt before management's plans: the conditions or events, the significant elements of management's plans, the procedures on them and the evidence, and the conclusion on whether substantial doubt remains. If no conditions were identified, the memo says what procedures were done and the conclusion. See going concern assessment under AU-C 570.
6. Subsequent events
AU-C 560.09 and .10 require procedures covering the period from the date of the financial statements to the date of the auditor's report or as near as practicable thereto. The memo states the date through which procedures ran, the inquiries made and the events identified. See subsequent events procedures.
7. Written representations
AU-C 580.20 requires the representations to be dated as of the date of the auditor's report and to cover all financial statements and periods referred to in the report. The memo records the date received, any additional representations requested, and any that were refused or doubted. See representation letter refusals and dating.
8. Communications
Matters communicated to those charged with governance: for nonissuers under AU-C 260 (paragraph .21 requires documenting oral communication with when and to whom), and for issuers the AS 1301 matters. See AS 1301.
9. Conclusions and sign-offs
State that sufficient appropriate evidence was obtained, the opinion type and why, outstanding items (none, before release), the report release date (AU-C 230.15), and the partner's sign-off. Add the EQR completion date where applicable.
Worked example: summary of uncorrected misstatements
Assume overall materiality for the year of $240,000 (illustrative, set at planning and reassessed at completion with no change). The following misstatements were accumulated and management declined to record them.
| # | Description | Type | Assets over (under) | Liabilities over (under) | Pretax income over (under) |
|---|---|---|---|---|---|
| 1 | Year-end bonus accrual not recorded | Factual | 0 | (85,000) | 85,000 |
| 2 | Revenue recorded before delivery | Factual | 40,000 | 0 | 40,000 |
| 3 | Allowance for credit losses below the supportable estimate | Judgmental | 30,000 | 0 | 30,000 |
| 4 | Note payable of 62,000 due within 12 months classified as long-term (reclassification only) | Factual | 0 | 0 | 0 |
| Totals | 70,000 | (85,000) | 155,000 |
Check: assets overstated by $70,000 ($40,000 plus $30,000) and liabilities understated by $85,000 means equity overstated by $155,000, which equals the pretax income overstatement ($85,000 plus $40,000 plus $30,000). The $155,000 is 64.6 percent of materiality ($155,000 divided by $240,000).
The memo conclusion on this schedule would cover more than the total. Item 4 changes working capital, which matters if there is a debt covenant. Items 1 to 3 all overstate income, a direction the team should discuss for indicators of management bias, and AU-C 450.09 requires understanding management's reasons for not correcting. The prior-period effect of any unreversed amounts is also considered (450.11b). The basis for concluding they are not material, individually or in aggregate, is written out, not implied.
Frequently asked questions
Is the completion memo the same as the review checklist?
No. A checklist shows that steps were done. The memo explains conclusions and judgments. A9 of AU-C 230 notes that separate checklist documentation of matters already demonstrated in the file is unnecessary.
How long should the memo be?
Long enough for an experienced auditor with no connection to the audit to understand the significant findings (AU-C 230.08c and AS 1215.13). The memo and its cross-references together carry the weight.
When is it finished?
Before the report is released. The final documentation assembly happens after, within 60 days under AU-C 230.16 or 45 days under AS 1215.15. See the AS 1215 rules.
Sources
- AICPA, AU-C Section 230, Audit Documentation (paragraphs .08, .11, .12, .15, .16, A9, A10, A13): https://www.aicpa-cima.com/resources/landing/aicpa-professional-standards
- AICPA, AU-C Section 450 (paragraphs .09 to .12), Section 330 (paragraph .30), Section 570 (paragraph .32), Section 560 (paragraphs .09, .10), Section 580 (paragraph .20): https://www.aicpa-cima.com/resources/landing/aicpa-professional-standards
- PCAOB, AS 1215, Audit Documentation (paragraphs .12, .13, .15): https://pcaobus.org/oversight/standards/auditing-standards/details/AS1215
- PCAOB, AS 1220, Engagement Quality Review (paragraph .10e): https://pcaobus.org/oversight/standards/auditing-standards/details/AS1220
CORAA prepares ready-to-review audit files for US CPA firms from client books; you review and sign. See /us.
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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