Back to: Auditing
Hello, welcome to today’s class.
Having learned the critical aspects in auditing, we’ll be taking a step further by looking at audit working papers.
Lesson Objectives:
By the end of this class, students should be able to:
Define audit working papers.
State the types and contents of audit working papers.
Explain the importance of working papers to the auditor.
What are Audit Working Papers?
Audit working papers are all the written documents, forms, calculations, and notes that the auditor prepares or collects during the audit. They are used to record the evidence, the procedures performed, and the conclusions reached.
They are like a student’s notebook after attending a lecture. If someone wants to see how you got your answers, your notes will help explain.
Types of Working Papers:
1. Permanent Working Papers:
These are documents that are useful for more than one audit period. For example:
Company’s registration documents (CAC certificate)
Past audit reports
Long-term contracts
Organisational structure
These papers are stored and reused for future audits.
2. Current Working Papers:
These are records specific to the current year’s audit. Examples include:
Audit programme for this year
Bank statements
Trial balance
Calculations
Notes from meetings
These are only used for the current year’s audit.
Contents of Working Papers:
Working papers may contain:
A copy of the engagement letter
Details of audit procedures
Evidence collected (receipts, invoices, letters)
Checklists used
Schedules prepared by the client
Observations and findings
The auditor’s final conclusion
Everything is recorded so that another auditor can read it and understand the work that was done.
Importance of Audit Working Papers:
1. Proof of Work Done:
If anyone questions the audit, the working papers can show what was done and why.
2. Support for the Audit Report:
All the information used to prepare the report is recorded here.
3. Future Reference:
The papers help when doing the next year’s audit. They give a background to the client’s business.
4. Helps in Review:
If a senior auditor or external body wants to review the audit, the working papers make it easy.
5. Legal Protection:
If there is a legal case, the working papers can defend the auditor and show they followed procedure.
Real-Life Example:
Imagine an auditor checks school fee payments for a private school. He collects receipts, checks the bank account, and calculates total fees. He notes any errors. All this information is written down and filed – those notes and documents are audit working papers.
Summary of Lesson:
Audit working papers are essential records that support the audit process. They include everything the auditor did, saw, and decided. Working papers help in reporting, future planning, and even legal matters. They come in two main types – permanent and current files.
Evaluation:
What are audit working papers?
Mention two types of working papers.
List three items found in audit working papers.
Why are working papers important? (Give two reasons)
What is the difference between permanent and current working papers?