IIA Working Papers

8/12/2019 IIA Working Papers

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WORKING PAPERS (WP)

IIA Standard 2330

The following is intended to expand on IIA Standards 2330 and 2340This section concerns the documentation of the work of the internal audit activity by means of working

papers, whether in traditional form or recorded on electronic media.

WP FUNCTIONS

i. Working papers that document the audit should be prepared by the internalauditor and reviewed by management of the internal audit activity. The workingpapers should record the information obtained and the analyses made andshould support the bases for the observations and recommendations to bereported. Audit working papers generally:

1-Provide the principal support for the audit communications.2-Aid in the planning, performance, and review of audits.3-Document whether the audit objectives were achieved.4-Facilitate third-party reviews.5-Provide a basis for evaluating the internal audit activity's quality program.6-Provide support in circumstances such as insurance claims, fraud cases,

and lawsuits.7-Aid in the professional development of the internal auditing staff.8-Demonstrate the internal audit activity's compliance with the International

Standards for the Professional Practice of Internal Auditing.

ii. Working papers support the audit observations, conclusions, andrecommendations. Effectively and efficiently organized working papers helpto guide the audit work so that it remains relevant to the audit objectives.

a. Thus, an internal auditor should maintain the focus of the auditby considering how the work will affect audit communications.

iii.Working papers document information in its numerous forms.They record the observations suggested by this information with regard to

the existence or nonexistence of exposure to risk. The information recordedalso helps to determine the extent and significance of these exposures and

possible corrective action.iv. The information in working papers provides essential background for the internal

auditors' technical discussions with audit clients.

v Supervisory review of the working papers which is itself documented aids in the control


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to the working papers.

viii.The law may require that an organization maintain an effective system of internal accountingcontrol. Working papers can provide part of the required documentation of compliance.

For example, in the U.S., the Foreign Corrupt Practices Act establishes such a requirement.Moreover, the Sarbanes-Oxley Act of 2002 requires a public company to issue an annual internal

control report that states management is responsible for establishing and maintaining an

adequate internal control structure and procedures for financial reporting.

WP CONTENTS

a. The organization, design, and content of audit working papers will

depend on the nature of the audit. Working papers should document thefollowing aspects of the audit process: Planning. The examination and evaluation of the adequacy and effectiveness of the system of

internal control.

The audit procedures performed, the information obtained, and the conclusionsreached.

Review. Communicating. Follow-up.

b. Audit working papers should be complete and include support foraudit conclusions reached. Among other things, audit working papers mayinclude: Planning documents and audit programs. Control questionnaires, flowcharts, checklists, and narratives.Notes and memoranda resulting from interviews. Organizational data, such as organization charts and job descriptions. Copies of important contracts and agreements. Information about operating and financial policies. Results of control evaluations. Letters of confirmation and representation. Analysis and tests of transactions, processes, and account balances.

Results of analytical procedures. The audit's final communications and management's responses. Audit correspondence if it documents audit conclusions reached.


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SUMMARY REVIEW OF WORKING PAPERS

01- Table of contents

02- Planning checklist An itemized checklist of the steps necessary tocomplete the audit, such as preparation, initialsurvey, review of internal controls, etc.

03- Authorization form A form designating the audit client, the objectivesand scope of the audit, the assigned internalauditors, the estimated number of hours requiredto complete the audit, and the kickoff date. Thisform is signed by the chief audit executive

04- Preliminary memo to the audit client An interoffice memorandum to the audit clientconfirming the audit arrangements.

05- A cross-referenced final audit communication, interimmemoranda, and follow-up communications

Individual items contained in thesecommunications are cross-referenced to specificworking papers prepared during the audit andincluded in this file.

06- Audit client's written response to audit observations,

conclusions, and recommendations

Copies of the audit client's responses to the audit

communications and interim memoranda.Sometimes cross-referenced to thecommunications and memoranda.

07- Review notes on the working papers The audit supervisor's and manager's notes on theworking papers indicating additional work,changes in the working papers, and othercomments.

08- Audit work program The step-by-step procedures performed on the

audit.09- Summary observations sheets Brief summaries of significant information,observations, conclusions, evaluations, andalternative recommendations.

10- Preliminary survey

10.a- Minutes of opening conference

10.b- Summary of observations made during the on-site tour

10.c- Notes from the study of background materialsand copies of relevant documents


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11.d- Written description of the audit client'soperations

A copy of the description of the audit client'soperations. Another copy will be placed in theaudit client's permanent file

12.e- Analytical review worksheet Copies may also be included in the audit client'spermanent file11- Review of internal control

11.a- Completed internal control questionnaires

11.b- Flowcharts and descriptions of internal controls

11.c- Worksheets and notes on walk-through tests

11.d- Worksheets on limited tests Includes detailed lists of the items selected, thenature of the tests, results, conclusions, and the

effects on further audit planning.11.e- Internal control matrix Working papers prepared to evaluate the auditclient's internal control system

12- Worksheets from expanded testing Various schedules, worksheets, reconciliations,copies of documentation, confirmation letters,interview schedules and notes, etc., organizedaccording to the sequence of steps outlined in theaudit work program for specific areas beingexamined.

13- Miscellaneous papers Papers not conveniently classified in the areasunder study in the audit work program. Theseinclude such items as notes or observations whileperforming the audit, notes on relevant telephoneconversations and informal encounters with theaudit client's personnel and others, and otherdocumentation of information acquired during theaudit in addition to that outlined in the audit work

program.14- Follow-up working papers Various schedules, worksheets, changes in policy

statements and procedures, etc., resulting fromaudit follow-up

Documents

IIA Working Papers