accounting and finance material

1. AUDIT WORKING PAPERS

2. Definition
 The term “audit working papers” means the
worksheets compiled by the auditor in the
course of making audit, together with other
pertinent material.
“Other pertinent material” may include letters,
faxes, memoranda compiled by the taxpayer,
photocopies of letters, reproduced copies of
pertinent schedules, information from prior
audit working papers, etc.

3. Purpose Of Working Paper
Audit working papers serve four major
purposes:-
 They constitute a permanent record of the
objectives and scope of the audit, as well as
the work performed during the audit. Work
papers organize and coordinate all phases
of the audit.
 They contain the back-up material in
support of the audit findings, conclusions,
recommendations, and comments.

4.  They contain the basic material from which
the audit report is prepared.
 They reflect the quality and reliability of the
work performed by the auditor and
substantiates and explains in detail the
conclusions and findings presented to the
management.

5. General Guidelines For Working
Papers
 Working papers serve as the connecting link
between the auditor’s work and the audit
report. As such, working papers should
contain the evidence accumulated in
support of the conclusions and
recommendations included in the audit
report.

6. Preparation of working pinclude:
Completeness and accuracy
Working papers should be complete and
accurate in order to provide proper support for
findings, conclusions, and recommendations.
The test of completeness is whether a third party
can review the schedule, understand its purpose,
and make use of it, without consulting with the
auditor who prepared it. Working papers will be
examined by the auditor’s supervisor, and by the
reviewing auditors, and may be used by appeal
committee, management and as evidence in courts
of law

7. Clarity an understandability
Working papers should be clear and
understandable without supplementary oral
explanations.
Anyone using the working papers should be
able to readily determine their purpose, the
nature and scope of the work done, and the
auditor’s conclusions.

8.  Legibility and neatness
Working papers should be legible and as neat as
practicable.
 Use careful handwriting
 Use of captions to separate subjects
 Separate subject matter properly

9.  Pertinence፡-
the information contained in working papers
should be restricted to matters that are
material, pertinent, and useful with reference
to the audit assignment. The auditor should
not copy figures from the taxpayer’s books
without good reason,

10. Content of Working Papers
1.Heading
Name of the Auditee
Location of the Auditee
Program audited
Audit period
2.Title

11. 3. Date of Preparation and the Identity of the
Auditor
4. Notes and Other Symbols
5. Index
6. Review

12.  Source of Information
 Scope of the Examination
 Results/Findings
 Conclusion

13. Electronic Working Papers
 Working papers developed on computers
generally should be printed and, along with any
relevant backup, retained in the working paper
files. Automated working papers should be
sufficiently documented to permit a reviewer to:-
 Identify the data processing procedures used.
 Determine how the data processing procedures
were utilized.
 Ascertain that the data processing steps,
procedures and logic were proper.

14. Cross-Referencing
 Cross-referencing is defined as a notation at
one place in the working papers to related
information at another place. Cross-
referencing may consist of an index page
number, line/column of a schedule, reference
to a paragraph of a narrative document or
any other unique identifier which will pinpoint
the location of data in the working papers.

15. Benefit of cross-referencing.
In a typical review, the following items should
be cross-referenced:
 Working papers to each other, when
appropriate
 Audit program to the working papers
 Draft report to the working papers
 Final report to the working papers

16. Audit process is responsible for safeguarding
working papers in their custody. Working papers
frequently contain information about Auditee
operations that are a confidential nature. To
protect Auditee information that may be
confidential, working papers and data should not
be left open to the view of others who may not
have a right to examine it. Working papers should
also be protected from theft, damage or loss at all
times. This may require the use of file cabinets,
desk drawers or briefcases with secure locks.
Safeguarding Working Papers

17. Review Of Working Papers
 The most effective way to ensure the quality and
expedite the progress of an audit is for audit team
members to review and comment on the working
papers of the audit from the start of planning to the
completion of audit work and reporting.
Participation by all team members in the review of
working papers adds fresh insight, assures quality
products and seasoned judgment to the work
performed by less experienced staff.

18.  The depth of the working paper reviews will
vary. Reviews by on-site team members
should be accomplished frequently during
the audit and are expected to be more
detailed than those made by higher-level,
off-site audit team members. However,
reviews at all levels should be performed on
an ongoing basis and documented in the
working papers.

19. Thank You