Audit Working Papers
Papers and documents which contain important facts about accounts which are under audit are called as Audit Working Papers. Working papers provide the basis of conclusions and summarizations of the report prepared by the auditor at the end of the audit work. As per SA-230 “Audit Documentation” audit working paper refers to the documents proposed or obtained by the auditor and retained by him in connection with the performance of his audit.
The term ‘audit working paper’ mean the written paper and document containing details about accounts which are under audit, analysis, summaries and comments built up by an auditor during the course of a particular audit engagement.
Thus, all the documents gathered or prepared by auditors during the course of an audit constitute audit working papers, but broadly these are two types:
· Working papers prepared by the auditor himself, like audit note book, audit program, details of queries made and their explanations thereof.
· Working papers collected by the auditor from the client, like schedule of debtors and creditors, management representations, confirmations etc.,
Institute of Chartered Accountants of India defines audit working paper as, “working paper must include audit program, queries, explanations given for the queries, schedules for the important items like depreciation, inventories, confirmation from third parties, certificates issued by the management, banks,etc..”.
Prof. Meigs, “the term working paper is a comprehensive one and includes all the evidences gathered by the auditor to show the work he has done, the methods and procedures he has followed and the conclusions he has developed”.
Guidelines of Audit Working Papers as specified in SA-230, Audit Documentation
Working Papers prepared or obtained by the auditor in connection with the performance of audit are the property of auditor and it is the duty of the auditor to retain and preserve the working papers for a period of 7 years.
According to A.W. Johnson, “Audit working papers are written, private material which the auditor prepares for each audit. They describe the accounting information used, his conclusions (and reasons thereof) and the financial statements.”
The documents obtained in the conduct of audit constitute the audit working papers. The content of audit working papers varies depending on the type and scope of audit. Auditing and Assusrance Statndards (AAS 3) issued by the Institute of Chartered Accountatns of India states working papers should record the auditors plan, the nature, timing and extent of the audit procedure performed and the conclusions obtained from the evidence.
In general audit working papers consists of the following:
1. Schedule of Debtors, Creditors and bank statement.
2. Correspondences and balance confirmations from Debtors, Creditors and bankers.
3. Correspondences from legal advisors and statutory authorities.
4. Certificates of officials with regard to bad debts.
5. Certificate from valuers for valuing stock-in-trade and investments.
6. Certificate confirming cash balance.
7. Certificate from authorized person with regard to outstanding assets and liabilities, contingent assets and liabilities etc.
8. Bank Reconciliation statement.
9. Adjusting entries.
10. Copies of the minutes of the meeting of directors and shareholders.
1. Planning and Organizing Audit Work: Working papers provide a means of planning, organizing and reviewing the audit work. They are the evidence for conducting the audit work against the generally accepted auditing standards and practices.
2. Support for Auditor’s Opinion: Working papers provide support for the report of the auditor. When the auditor’s opinion on financial statement or recommendations given by the auditor is questioned working papers support the opinion or recommendations given by the auditor.
3. Division of Labour: Working papers help in dividing the audit work among the audit staff so that each staff is responsible for his work to the auditor.
4. Use as a Permanent Record: Working papers are the permanent record of the auditing procedure employed and the financial records examined during the conduct of audit.
5. Basis for Evaluation and Training of Audit Staff: Working papers provide a means to test whether the auditor and his staff have done their job as per the standards. Training to the staff can be provided by reviewing the working papers of past years.
1. Planning the Audit Work: It acts as the process of planning for the auditor so that he can estimate the time that is required for conducting the audit work.
2. Helps in Fixing Responsibility: It helps in fixing responsibility and to measure the work being performed by the audit assistants.
3. Helps in Drawing Conclusions: Working papers are necessary to draw conclusion from the evidence obtained.
4. Helps in Preparing Audit Report: The auditor prepares and finalises the audit report taking into account the informations or extracts contained in the working papers.
5. Documentary Evidence: It is a valuable documentary evidence in the Court or Tribunal of law when a charge of negligence is brought against the auditor.
6. Permanent Record: Working papers are the permanent record of the work done by the auditor during a particular period of time.