Audit Documentation/ Working Papers

Working papers are records kept by the auditor that documents the audit procedures applied.
Information obtained and conclusions reached.

PSA 230 requires the auditor to document matters that are important to support an opinion on financial
statements, and evidence that the audit was conducted in accordance with PSA

FUNCTIONS
Primarily to:

 Support auditors’ opinion on Financial Statements

 Support auditors’ representation as to compliance with PSA
 Assist the auditor in the planning, performance, review and supervision of the engagement

Secondarily to:

 Plan future audits

 Provide information useful in rendering other services
 Provide adequate defense in case of litigation

FORM, CONTENT AND EXTENT

Contain sufficient information for an auditor who did not work on an audit to discern the reasons for the
opinion given regarding a client’s financial statements.

Auditor should consider what would enable an experienced auditor, having no previous connection with
the audit to understand the procedures used, results and audit evidence, significant matters arising
during the audit and conclusions reached.

The following would normally require audit documentation:

 Discussions of significant matters with management and others on a timely basis

 When the auditor judges it necessary to depart from a basic principle or an essential procedure
that is relevant in the circumstances of the audit, auditor should document how alternative
audit procedures performed achieve the objective of the audit and reasons for the departure
 In documenting the nature, timing and extent of audit procedures performed, auditor should
record (a) who performed the audit work and date of completion, (b) who reviewed the audit
work performed and the date and extent of such review.

CLASSIFICATION OF WORKING PAPERS

PERMANENT FILE

- Contains information of continuing significance to the auditor in performing recurring audits

o Copies of Articles of Incorporation and by-laws
o Engagement letter
o Organizational chart
CURRENT FILE

- Contains evidence gathered and conclusions reached relevant to the audit of a particular year
o Copy of Financial Statement
o Audit program
o Working trial balance

OWNERSHIP

- Property of auditor
- Client has no right, but may serve as a reference source for client (with discretion of auditor) but
are not considered as part or as a substitute for the client’s records.

CONFIDENTIALITY

- Personal property of the auditor

- Cannot be shown to third parties without client’s permission

Section 4 of the Philippine Code of Professional Ethics requires CPA to respect the confidentiality of
information obtained during the course of performing

Confidentiality is overridden by the statute if law:

Auditor can disclose confidential info to third parties even without client’s consent:

 Disclosure is required by law or subpoenaed by a court

 Professional right to disclose info, auditor uses to defend himself when sued by the client for
negligence.

RETENTION

- Period of time sufficient to meet the needs of his practice and to satisfy any pertinent legal
requirements of record retention.

GUIDELINES FOR PREPARATION

The following techniques may be used by the auditor when preparing working papers:

- HEADING
properly identified with information; name of client, type of working paper, description of
content, date/period covered by examination
- INDEXING
Use of lettering or numbering system, aid in cross-referencing essential info
- CROSS-INDEXING/CROSS REFERENCING
Provide a trail useful to supervisors in reviewing the working papers
- TICK MARKS
Include symbols that describe the audit procedures performed