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Audit Working Papers
Audit Working Papers
Working papers are the evidence of work done by the auditor, he should prepare working papers
in order to provide evidence that audit was properly performed according to ISA standards.
Working papers support auditor, in-case he is being sued in court by the client, for negligence of
audit work.
Uses as evidence.
Sometime, any party may behave like a neglect person, at that time, these working papers will
become the evidence of reported facts.
Each audit working paper must be headed with the following information:
1. CONTRACT LETTER:
The working papers contain the contract letter. This letter gives right to a person to a start work
of audit. It states the terms and conditional of appointment of an auditor. The nature and amount
of work is recorded. This letter becomes a part of audit working papers.
2. AUDIT PROGRAMME:
An audit program is a detailed plan of action to be used for audit. It is a time table of staff duties.
The books to be examined are stated in audit program. Every audit work requires program and
then master audit program is prepared to cover all activities.
4. COPIES OF DOCUMENTS:
The copies of various documents are included in audit working papers. The partnership deed,
article of association, memorandum of association, trust deed, lease contract and similar other
papers are collected from the management. These papers are useful to determine the
performance of business work.
5. COPIES OF CRRESPONDENCE:
The copies of correspondence become part of audit working papers. The auditor can write letter
to other parties. The replies can be received from debtors and creditors. The audit staff must
keep the exchange of letter between auditor and other people.
6. SCHEDULE OF DEBTORS:
The client provides the schedule of debtors. This list is compared with the books of accounts. The
auditors can confirm the balance from various debtors. He collects facts and figures by writing
letters to the customers.
7. STOCK CERTIFICATE:
The stock certificate is received from the management. The auditor can watch the stock taking
process. When the stock is lying in public warehouse, the certificate of warehouse keeper is
accepted for audit.
9. RESOLUTION COPIES:
Auditor collects the copies of resolutions. These copies are part of working papers. These copiers
are part of working papers. The decisions made by the directors and shareholders are
implemented in preparing of books of accounts. The auditor can determine whether such
decisions are implemented.
10. DEPRECIATION:
The audit working papers contains the particulars of depreciation. The rate of depreciation can
be applied throughout the life of an asset. The reasonable amount of depreciation can be charged
every year. The auditor can determine the exact amount of depreciation.
11. INVESTMENTS:
The management can buy and sell shares and debentures of different companies. The investment
can be exchanged through brokers. The register of investments shall the purpose to collect
various particulars relating to investments.
1. The diversity of audit assignment prevents the establishment of a single system or design
of working papers to be used. Therefore, a uniform working paper format may not be used
but work papers for functional areas such as cash receipts should display conformity in
various types of audits.
2. Work papers may be in the form of paper, tapes, disks, diskettes, films, etc. There should
be backup copies of electronically generated working papers. The backup copies should not
be stored with the original copies.
Indexing the audit working papers essentially means preparing a Table of Contents. A well-
organized set of working papers enables the auditor to understand the relationships of
transactions and how they impact different accounts. It also enables the reviewers to
perform their work more effectively and efficiently and to devote their attention to the
critical audit areas.
There are many different ways that working papers could be indexed. The important
consideration is that the organization and indexing be logical.
• In the case of audit papers prepared by client staff, the date the working papers were
received, and the initials of the audit team member who carried out the audit work.
• The initials of the member of staff who reviewed the working papers and the date which
the review was carried out.
The working papers prepared during the engagement, including those prepared by the client for
the auditor, are the property of the auditor. The only time anyone else, including the client, has
a legal right to examine the papers is when they are subpoenaed by a court as legal evidence.
Ordinarily, working papers can be provided to someone else only with the express permission of
the client. This is the case even if a CPA sells his practice to another CPA firm.
Working papers (confidential information) prepared during audit engagement are the property
of the auditors Can only be provided to third parties with express permission of the client.
Tick marks are symbols used by the auditor to indicate the nature and extent of procedures
applied in specific circumstance. Tick marks are notations directly on the working papers
schedules. Tick marks are generally done by hand with a pen or pencil alongside a specific item.
IMPORTANCE OF WORKING PAERS
1. Working papers are instruments vital to the successful accomplishment of all audit
assignments performed. The working papers provide documented evidence of an
examination and evaluation and provide a connecting link between the work which is
performed and the final audit report. Hence, their importance cannot be overly emphasized.
2. To a major extent, every auditor is judged by his skill and ability in preparing working papers.
When working papers are prepared in good form with proper attention to layout, design, and
legibility, with complete headings, explanations of sources, and verification of work
performed, they create a feeling of confidence in the ability of the staff member. Working
papers should always convey an impression of system and order and conscientious attention
to detail, coupled with a clear distinction between the important and the trivial.
3. Another test of good working papers occurs when it is necessary for one staff member to
leave a partially completed assignment and turn it over to another staff member. If the latter
can proceed without confusion then the working papers have stood the critical test of being
able to stand on their own.
4. Every auditor will be expected to continuously strive for the highest standards of excellence
in the preparation of working papers.
• Hot review: WP prepared by an audit staff is reviewed by a more experienced staff during
the course of the audit.
• Post audit review: the audit manager and partner review the audit file and the FS.
• Second partner review: applicable for large and complex audit.
• Cold review: a group of experienced staff form a team to review in detail the work performed
by an audit team and ensuring that the audit has been conducted in accordance with the firm
standard procedures.