Documents Required to be Retained in Audit

Documentation

Engagement Team Members

Among Engagement Team Members
If a document (including email) reflects a difference of opinion or an inconsistent view
regarding a significant matter, then it must be retained
However, documents containing preliminary or incomplete information or data, or
reflecting preliminary views based on incomplete information or data, dont need to be
retained
Preliminary or incomplete information
Information that initially appears to be inconsistent or contradictory, but is found to be
incorrect or incomplete, need not be included in the final audit documentation, provided that
the apparent inconsistencies or contradictions were satisfactorily resolved by obtaining
complete and correct information. In addition, documents that include preliminary views based
on incomplete information or data are not considered to contain information inconsistent with
the auditor's final conclusions. However:

We must be very careful when evaluating whether all relevant factual information and
data are complete and determining whether a view that has been expressed is
preliminary. This is a principle that must be interpreted and applied in "substance"
and not in "form."
Once all relevant factual information & data is known, views expressed are not
considered preliminary
Application of incorrect GAAP or misapplication of correct GAAP do not constitute
incomplete information or data
All documents containing inconsistent views regarding a significant finding or issue
(i.e., significant matter) that are not preliminary must be retained, even if the
inconsistency is properly resolved
Simply labelling documents "preliminary" does not prevent them from having to be
retained.
Inconsistent views are not limited to circumstances under which disassociation is
documented under our policy on resolving differences (see PwC Audit US 2711) or to
disagreements of the type that would constitute a reportable disagreement under
Item 304 of Regulation S-K. Rather, the requirement should be read to encompass all
situations in which the engagement team members believe that they have gathered
enough information to have an informed view and there is a divergence of view or
difference of professional judgment among team members; between the engagement
team and the client; or between the engagement team and risk management, the
National Office or others within the Firm

Examples of Documents Generally Required to be Retained Among Engagement Team

Members
A draft SUM that contains three unadjusted differences but the final SUM only
contains two of those three because a decision was made not to include an item
A draft audit committee report that reports a significant deficiency in internal control
but the final report does not
An Aura work paper that originally states the environmental reserve is materially
misstated but the final work paper does not

Documents Required to be Retained in Audit

Documentation

National Professional Services Group (National)

Between Engagement Team and National
All documents reflecting substantive communications between the engagement team
and National Professional Services Group (National), including email and handwritten
notes, must be retained in audit file by the engagement team even if summarized
elsewhere in audit file
o It is presumed that all communications between an engagement team and
National are substantive (and are significant matters) unless they relate solely
to administrative matters such as scheduling a meeting

All such documents must be retained whether they support our final conclusion or
contain inconsistent information or an inconsistent view, even if the inconsistent
information or view is preliminary.
Superseded drafts of financial statements or regulatory filings and notes on such
superseded documents do not need to be retained unless they reflect inconsistent
information or views.
o However, if the inconsistent views are based on incomplete information or
data, then such superseded drafts do not need to be retained

Examples of Documents Generally Required to be Retained Between Engagement

Team and National

All substantive emails to or from National (including RMPs) regardless of whether

they contain an inconsistent view or are based on preliminary information or data
Superseded draft regulatory filing that includes a comment or view (of team member
or National consultant) regarding a significant matter that is not preliminary and is
inconsistent with the final conclusion
All handwritten notes from phone conversations with National regardless of whether
they contain an inconsistent view or are based on preliminary information or data
All substantive comments regarding a significant matter from a SEC services
reviewer/consultant whether received via email, fax, phone or Word document
o Comments on financial statements and footnotes are considered significant
o Comments on MD&A, pro formas, 5-year summary, etc. judgment must be
exercised to determine significance

OGC
Between Engagement Team and OGC
This is the same policy as between engagement team and National R&Q, except that
privileged communications must be:
- Printed out
- Retained only in hard copy
- Maintained in a separate file labeled Attorney/Client Privileged Documents
Unless otherwise instructed by OGC, all communications with OGC should be treated
as privileged. OGC will make a determination as to whether privileged applies at the
appropriate time.

Documents Required to be Retained in Audit

Documentation
Client
Between Engagement Team and Client
All substantive communications (including email and handwritten notes) between the
engagement team and the client regarding a significant matter that contain
conclusions, opinions or analyses (expressed by us or the client) relevant to the audit
must retained, even if they are summarized elsewhere in the audit file.
Superseded drafts of memoranda, financial statements and regulatory filings and
notes on such superseded documents do not need to be retained unless they reflect
an inconsistent view regarding a significant matter that is not preliminary (i.e. not
based on incomplete factual information or data) A lack of knowledge or
understanding of professional standards and their application to a matter is not
considered to be incomplete factual information or data.

Examples of Documents Generally Required to be Retained Between Engagement

Team and Client
Annotated drafts of SEC filings that contain views inconsistent with the final
conclusions regarding a significant matter
All emails to/from client expressing a view regarding a significant matter regardless of
whether they contain an inconsistent view or are based on preliminary information or
data
Draft memo (prepared by team or by client) regarding a significant matter that
includes a comment or view that is not preliminary and is inconsistent with the final
conclusion
Engagement leaders handwritten notes on audit committee report that are the basis
for communication to the client/audit committee

Third Parties
Between Engagement Team and Third Parties
Audit file should include written or electronic evidence obtained from third parties
(e.g., confirms, legal letters, other correspondence)
All other communications (including email) with third parties that contain conclusions,
opinions, or analyses (expressed by us or by client) relevant to the audit must be
retained
Generally all substantive documents from third parties need to be retained
Treat non-US PwC firms as third parties for purposes of applying the document
retention policy so that substantially all documents exchanged between the US and
non-US PwC firms will be retained in the audit documentation.
Examples of Documents Generally Required to be Retained Between Engagement
Team and Third Parties
Draft copies of legal letters
Substantive emails to or from non-US PwC firms
Both copies of an Accounts Receivable confirm when there is a substantive change
Handwritten notes from a phone conversation with a third party regarding a significant
matter