Ownership and Retention of the Audit Documentation
Your firm owns all audit documents it prepares. It doesn’t make any difference that the client paid for the audit; the documentation isn’t the client’s property.
However, just because your firm owns the audit documents doesn’t mean your firm can show the documents to anyone outside the firm. Only employees working on the audit should be able to access the documentation. And rarely do you share the documents with anyone outside the firm without the client’s permission. One instance when your firm would be compelled is under subpoena.
The Public Company Accounting Oversight Board’s (PCAOB) basic requirement is that you keep audit documentation for a period of seven years unless a longer period is required by law. This requirement includes any documents created, sent, or received that contain opinions, financial data, or conclusions about the audit or review.
Nonpublic companies aren’t required to follow the PCAOB’s rules. However, many state accounting boards have adopted similar retention policies. Your firm will more than likely follow PCAOB standards for all audits — public and nonpublic. This doesn’t create a massive storage issue because the records don’t have to be kept in paper format.
If you’re working in a field location where it’s convenient to operate your laptop, most of your workpapers are already in some type of electronic format. Otherwise, they can be (and usually are) converted to some sort of electronic media storage.
You’re also at the mercy of the client securing paper versus electronic records.