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The Working Papers of Maltese Internal Auditors:
An Analysis
MFIA CONFERENCE 2015
Kim Spearing
Masters in Accountancy 2015
Objectives To determine the importance and functions of working
papers in IAing in Malta
To analyse the manner of recording throughout the internal audit process with reference to the following:
Contents Filing Format of Working Paper Content Review process Ownership, Access and Retention
To identify the electronic methods used in recording information
INTRODUCTION
RESEARCH METHODOLOGY
A Qualitative approach was deemed to be the most appropriate method
Semi-structured interviews were carried out with 13 local companies and the Big-4 Firms
The Triangulation Technique has been applied
Responses were transcribed and analysed using spread sheet
1ST OBJECTIVE
The Importance and Functions of Working Papers
RESULTS
Reason Mean IA Mean IAS Mean Total
Provide evidence of the work performed and
support the results and conclusions reached4.8 4.8 4.8
Facilitate 3rd party review and a means for audit
quality control4.5 4.5 4.5
Assist in planning and performing an audit 4.5 4.3 4.4
Compilation of working papers during rather than
at the end of audit4.3 4.3 4.3
A record of significant matters for future audit
reference4.6 3.8 4.2
Demonstrate auditor’s decision-making process
and factors considered4.5 4 4.2
Working Papers are pertinent to audit objectives
and ensure that they are being achieved4.4 4 4.2
Evidence of compliance with professional
standards4 4 4
Prepared to increase the economy, efficiency and
effectiveness of the audit4.2 3 3.6
Working papers provide information to other
departments and other users 3.1 3.8 3.4
Reflect changes in audit plan and procedures 3 3 3
IA IAS0
1
2
3
4
5
6
7
8
YesNo
No. of Respondents
0
1
2
3
4
5
6
7
8
9
YesNo
IA IAS
No. of Respondents
Changes in the amount of documentation kept by the company
Standard Working Paper
IA IAS0
2
4
6
8
10
12
YesNo
No. of Respondents
Authorisation & Approval of Working Papers
Appropriateness of Recording Information
2nd Objective
Recording the IAing Process
RESULTS
Time spent on documentation
9 IA - spend an average of 48% of the audit on documentation
4 IA – depends on the engagement
IAS Firms – spend an average of 29%
TheAuditPhase that takes
most time to document
7/17 – Execution Stage
Documents Prepared and their Contents
PLANNING
STAGE
Documents Prepared and their contents
EXECUTION
STAGE
Preparers
Format of Working Papers Content
PLANNING STAGE
Preparers
Type of Working Paper Content
EXECUTION
STAGE
Senior Staff Junior Staff N/A - Single Person Dept
0
1
2
3
4
5
6
7
8
9
10
IASIA
No. of Re-spondents
Narratives Flowcharts Questionnaires Other Form0
2
4
6
8
10
12
IAIAS
No. of Respondents
REPORTING
STAGE
Process
A closing meeting held with the auditee to discuss draft report
3 IA – meeting with internal auditors to discuss the audit
Signature of the Report
Majority – signed by the Head of IAF
Content of Report
Findings, Recommendations
and Management’s
Action Plan
Auditee Satisfaction Questionnaire
Issues targeted by the questionnaire
REPORTING
STAGE
IA IAS0
1
2
3
4
5
6
7
8
YesNo
No. of Respondents
All phases of the audit
whether the audit added value to the auditee
Timing of audit
Quality
Knowledge of auditor/Professional Due Care
Disturbance caused by the auditor
Communication with auditee
Adherance to Professional Standards
The performance/execution of auditors
Audit reporting
General feedback on the audit
0 1 2 3 4 5
Frequency
FOLLOW-UP
STAGE
Take Recommendations from Final Report and test whether these were
implemented
Common Approach
IA• Follow-up performed
in next audit & documented in final
report
• Discussed verbally and documented in
minutes during BOD meetings
• Discussed in AC meeting
IAS Firms
• Another full scope audit –planning,
testing and reporting
Click icon to add pictureReviewers of Working Papers
REVIEW
PROCESS
Head of IA
Senior M
anag
er/Assi
stant D
irecto
r
Someone se
nior to th
e prepare
r0
1
2
3
IAS
No. of Respondents
Head of IA
Head +
Supervi
sor o
f Audit
Audit Man
ager
Head of A
udit Team
No Review0123456789
IA
No. of Respondents
Electronic/ Manual Review
Preparation of Review Notes
REVIEW
PROCESS
Electronic Review Manual Review N/A0
1
2
3
4
5
6
7
IAIAS
No. of Respondents
IA IAS0
2
4
6
8
10
12
YesNo
No. of Respondents
Click icon to add picture
Distinction between Permanent and Current File
FILING
IA IAS0
2
4
6
8
10
12
14
No distinctionDistinction
No. of Respondents
Access to working papers is controlled by all respondents
Few requests for working papers
No access policy specific to IAF
Head of IAF controls and grants access
Access
LIAISING WITH
EXTERNAL
AUDITORS
To avoid work duplication & reduce testing due to time constraints (7/16)
To obtain assurance and comfort that controls are in place and working properly (3/16)
Better planning of the external audit (3/16)
To determine what the internal audit engagement covers (2/16)
To identify areas that merit more audit attention (2/16)
The external auditor gets the assurance that the internal auditor is performing the tasks the external auditor has recommended (1/16)
Reasons for reliance on internal auditor’s work
Documents provided to External Auditor
Request for External Auditor’s Working Papers
LIAISING WITH
EXTERNAL
AUDITORS
All docu
ments
Final
Report
Final
Report + S
pecific W
orking Pap
ers0
2
4
6
8
No. of Respondents
IA IAS0
2
4
6
8
10
12
YesNo
No. of Respondents
RECORDS
RETENTION
IA IAS0
1
2
3
4
5
6
7
8
YesNo
No. of Respondents Retention Policy within Internal Audit Department
RESULTS
3rd Objective
Electronic Methods
Pro’s Facilitate search for fi les and
the sharing of information between the audit team
Simultaneous access of the same document by diff erent users
Easier to fi lter data, to amend and update working papers
Use of templates is more possible
Better control of access through passwords and varied degrees of access
Electronic audit trail No physical storage space Printing is reduced
Con’s Increased costs in
maintenance and back-ups Failure of I.T. system Staff training
ELECTRONIC WORKING PAPERS
RECOMMENDATIONS
• It ensures homogeneity, consistency among team members and more structure to the physical paper
• Specific sector templates – effective at identifying issues during the audit
• Comprehensive information is documented in a consistent manner
Standardised Working Papers
• Lead to streamlining, more standardisation and discipline
• Facilitates referencing of working papers• Automates the process of providing raw data and
inserted directly in working papers
Electronic Working Papers
• Built in a way to assist the auditee to establish and document policies and procedures
• Better support the auditee in dealing with identified deficiencies
Sharing of Working Papers
• Informative sessions on documentation• Guidance on what needs to be documented and how to
use modern techniques and methods to improve documentation
Education and Training
THANK YOU
