How do you write audit working papers?

How do you write audit working papers?

Each audit working paper should include an appropriate subject, aim, client name, working paper date, audit period, sources of evidence, staff who prepare, and staff who evaluate. The reference to the relevant working paper should be struck out. The remaining space should be left for the auditor's notes.

The first section of the work sheet is used to record the objective of the audit. This should be written in the form of a question with "yes" or "no" responses. For example, "Was cash received in accordance with bank policy?" If necessary, additional questions can be included in this section to help clarify issues raised by the preceding answers.

The second section is used to record the results of the previous section. Results are recorded on a scale of 1-10, where 10 indicates that all questions have been answered in the affirmative and 1 indicates that all questions have been answered in the negative. The results section should not contain any further analysis or comments. Any additional notes should be included in the third section.

The third section is used to record details about sources of information and evidence. Auditors use their knowledge and experience to determine what evidence will provide the most accurate representation of the financial statements being audited. Evidence may include documents, interviews, observations, and calculations. Auditors may also obtain expert assistance when needed. Details about the evidence obtained should be included here.

When to include working papers in the audit timetable?

If client personnel write working papers that the auditor will keep, the auditor should agree on the structure of the working papers with client staff early in the audit and include this information in the audit timeline. The working paper format provides a convenient way for client personnel to record their thoughts on an issue that may not warrant a full-blown document such as a report or recommendation.

Working papers are used by accountants to make notes on issues that might otherwise be forgotten. Thus, they are extremely useful tools for auditors to use when examining client records.

The purpose of including information about working papers in the audit schedule is twofold: first, so that clients know what kind of work is being done on their behalf during the audit; second, so that clients do not feel blindsided if an issue arises after the audit has been completed but before it has been closed out.

Client approval is required for the inclusion of any material in the audit working papers section of the final report. Therefore, it is important for auditors to discuss with client personnel whether working papers should be included in the final report and, if so, what type of disclosure is appropriate.

In general, auditors should avoid including sensitive information in working papers.

What are the characteristics of good working papers?

Good Working Paper Characteristics

  • Working papers should contain all the essential information so that they may be of maximum utility.
  • It should state a clear audit objective, usually in terms of an audit assertion (for example, ‘to ensure the completeness of trade creditors’).

What are the contents of the audit working papers?

The Institute of Chartered Accountants of India defines the audit working paper as "a working paper must include audit program, queries, explanations given for the queries, schedules for the important items such as depreciation, inventories, confirmation from third parties, certificates issued by management, banks, etc." The Indian Audit Act requires that all public companies submit an annual report containing an audit opinion. The opinion is expressed on the basis of an audit conducted by a registered public accountant. The auditor's work paper is required to support his/her opinion.

Among other things, the working paper should contain: description of audit procedures performed; description of significant events occurring during the course of the audit; any additional information requested by the company during the progress of the audit; and conclusions with respect to the financial statements presented.

The working paper serves as a record of issues raised and resolved during the audit. It also provides a basis for the auditor's opinion on the financial statements.

Generally, four types of documents are found in the working paper: reports of significant events; questions asked by the company during the audit process; explanations given by management for certain aspects of the financial statements; and recommendations regarding future action based on the results of the audit.

Reports of Significant Events

How are audit working papers obtained and reviewed?

Audit working documents are often received or created by audit employees or audit assistance. These papers are then evaluated by a second auditor with additional expertise and authority, such as audit managers or audit partners. Evaluation may include discussion among colleagues to reach a consensus on certain issues, which would result in more detailed reporting within the broader scope of audit recommendations.

Working papers are intermediate documents used by auditors during an examination that serve to record their findings and conclusions at various stages of the review process. They are not official reports of the company being examined. Auditors may use different methods to obtain information about companies they are going to examine, including phone calls to management, reviewing public documents, and visiting companies' offices.

All significant items raised by the preliminary review of the financial statements are recorded in the working paper. These items will affect the final results of the audit and are discussed with management before the end of the evaluation period. If management agrees with the recommendation, the item will be included in the final report.

Items that cannot be resolved during the preliminary review are listed in the working paper and referred to management for follow-up. If management does not respond within a reasonable time frame, the item will be reported in the working paper and included in the final report unless it is considered too costly or difficult to verify.

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James Schenk

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