WORKING PAPERS Are direct aid in the planning,

performance, and supervision of the audit;

Records of audit evidence resulting from the audit work performed

Supporting documents for the auditor’s opinion

Provide proof of the adequacy of the audit

Importance of Working Paper

O necessary for audit quality control purposes

O provide assurance that the work delegated has been properly completed

O provide evidence that an effective audit has been carried out

O increase the efficiency & effectiveness of the audit

O contain sufficiently details & up-to-date facts which justify the reasonableness of the auditor’s conclusions

O retain records of matters of continuing significance to future audits.

O permanent record and back up material in support of the audit findings, conclusions, opinions, and comments.

O A basis for study of patterns and trends.

O Aid in the internal audit staff's professional development.

O Detailed supporting material for use in discussion with operating personnel.

O A source of evidence in litigation and in administrative actions.

O Demonstrate that auditors have complied with the Standards for the Professional Practice of Internal Auditors.

Confidential Nature of Workin g Papers

O Working papers include information concerning the scope of the examination and the extent of selective tests made, and this information should not be available to the staff of the audited entity.

O Audit working papers should be safeguarded against the unauthorized persons.

O Client or outside agency request to review Audit and Management Services work papers must be approved by an appropriate official.

Specific Standards for Each Workpaper

O Descriptive Heading. (heading at the top center)

O Auditor's Name and Date.

O Source of Data.

O Purpose and Scope of Audit Work Performed

O Auditors Verification Procedures

O Auditor's Conclusions.

O Evidence of Review.

SOME CHARACTERISTICS OF A GOOD WORKING PAPER

O It should state a clear audit objective, usually in terms of an audit assertion (for example, ‘to ensure the completeness of trade creditors’).

ADAJAR, D.ADAJAR, M.REYES, M.MELENDEZ, S.

WORKING PAPERSO It should fully state the

year/period end (eg 31 October 2006), so that the working paper is not confused with documentation belonging to a different year/period.

O It should state the full extent of the test (ie how many items were tested and how this number was determined). This will enable the preparer, and any subsequent reviewers, to determine the sufficiency of the audit evidence provided by the working paper.

O Where there is necessary reference to another working paper, the full reference of that other working paper must be given. A statement that details of testing can be found on ‘another working paper’ is insufficient.

O The working paper should clearly and objectively state the results of the test, without bias, and based on the facts documented.

O The conclusions reached should be consistent with the results of the test and should be able to withstand independent scrutiny.

O The working paper should be clearly referenced so that it can be filed appropriately and found easily when required at a later date.

O It should be signed by the person who prepares it so that queries can be directed to the appropriate person.

O It should be signed and dated by any person who reviews it, in order to meet the quality control requirements of the review.

Tick Marks

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.

Indexing

Work papers are indexed, i.e., cross referenced to aid in the organizing and filing. Indexing work papers requires coding the individual sheets of paper so that needed information may be found easily. Systems of indexing used include:

: Sequential numbering

: Combinations of letters and numbers, and

: Digit position index numbers

Adjusting journal entry

The auditor does not make entries in the client’s records. The auditor makes the entries on the work papers and reviews their entry with the client.

Arranging and Filing

Working papers for each audit will be retained in two standard files.

O Permanent File

O Current File

Workpapers should be filed as follows:

O Planning Folder

O Preliminary Survey Workpapers

O System Understanding Workpapers

O Audit Fieldwork Papers

ADAJAR, D.ADAJAR, M.REYES, M.MELENDEZ, S.

WORKING PAPERSGenerally, in more complex audits, individual segment section files will be set up for the following:

O A. Each organizational unit to be audited.

O B. Each major functional area within such units to be reviewed during the audit.

Permanent File

The permanent file is audit work papers containing all the data which are of continuing interest from year to year.

The permanent file is intended to contain data of historical or continuing nature pertinent to the current audit. This file provides a convenient source of information about the audit that is of continuing interest.

The permanent file usually includes the:

Copies or excerpts of company documents

Prior year analysis

Internal control information including: internal control questionnaires, flow charts, organization charts , and a listing of controls and control weakness.

Current Work Paper Files

The current work paper file contains all documentation applicable to the year under audit.

The current file ordinarily includes client summary information such as description of the client, client industry, client internal controls and the auditor’s materials.

The current file work papers will usually contain accounting-related information such as trial balances, lead schedules, analyses of transactions and balances and, if necessary, recommended journal entries to correct the accounts records.

The largest portion of working papers includes the detailed schedules prepared by the client or the auditors in support of specific amounts on the financial statements.

Working Papers

SAS 41 describes working papers as the records kept by the auditor of:

1. the procedures applied,

2. the tests performed,

3. the information obtained, and

4. the pertinent conclusions reached in the audit.

Working Papers

Working papers provide:

1. The principal support for the auditor’s report.

2. A means for coordinating and supervising the audit.

3. Evidence that the audit was made in accordance with GAAS.

Preparing Working Papers

The following essential techniques of good working paper preparation should always be observed:

1. Heading Each working paper should contain the name of the client, a descriptive title identifying the content of the working paper, and the balance sheet date or the period covered by the audit.

ADAJAR, D.ADAJAR, M.REYES, M.MELENDEZ, S.

WORKING PAPERS2. Index number Each working paper is give an index or reference number, for identification and filing purposes.

3. Cross-referencing Data on a working paper that is taken from another working paper or that is carried forward to another working paper should be cross-referenced with the index numbers of those working papers.

4. Tick marks Tick marks are symbols that are used on working papers to indicate that the auditor has performed some procedure on the item to which the tick mark is affixed, or that additional information about the item is available elsewhere on the working paper.

5. Signatures and dates Upon completing their respective tasks, both the preparer and reviewer of a working paper should initial and date it.

Types of Working Files

Current filesCurrent year working papers

Index and cross-referencing

Permanent filesItems of continuing audit interest

Types of Working papers included in current file:

Audit administrative working paper

Working trial balance Lead schedules Adjusting journal entries and

reclassification entries Supporting schedules Analysis of a ledger account Reconciliations Corroborating documents

ADAJAR, D.ADAJAR, M.REYES, M.MELENDEZ, S.