Audit Memorandum

Definition. An Audit Memorandum is a written note prepared by the auditor (or a senior member of the audit team) summarising the significant matters, understandings, instructions, and decisions relevant to a particular audit engagement, serving as a concise internal record that the whole audit team, and the auditor personally, can refer back to.

General contents of an Audit Memorandum typically include:

• The name of the client and the period covered by the audit.
• The scope and terms of the engagement (statutory or non-statutory, and any special instructions from the client or the appointing authority).
• The significant accounting policies followed by the client, and any changes from the previous year.
• Points requiring special attention during the audit, based on the preliminary review and planning.
• A note of significant matters discussed with management, and the decisions reached on any contentious or judgmental accounting issues.
• The allocation of work among the members of the audit team.