Auditing is not an easy job, and the job gets more difficult if all the working papers and the documents are not presented to the auditor on time. The auditors take special care in ensuring they have all the documents required for auditing. They avoid making unnecessary copies of documents that are not relevant, and they only have the required copies of the client's accounting records. The audit company hires professionals who are great at their job, or else their work will be doubled over time.
This article will explain what audit working papers are and the importance of having audition working papers.
1. What are audit working papers?
The documents and records needed during the audit of a company or an individual are known as the audit working papers. The audit working papers play an important role in supporting that the work done was performed following the necessary and relevant auditing standards.
The audit company and the auditors show that the audit was planned properly at the end of the audit, the audit was executed under expert supervision, the appropriate review was undertaken, and the evidence presented is enough and correct to support the audit opinion. The audit working papers are classified and cannot be disclosed to third parties without the company's consent.
The auditor follows the ISA guide to audit the documentation that is of a relevant and accepted standard. This helps the auditor be safe from any unfortunate or unnecessary litigation that the auditing process was unfair or biased. The working papers give the auditor an idea about the company's financial statements and other transactions carried out by the company.
2. Importance of auditing work papers
As mentioned above, the auditing work papers are very important and act as sound and correct sources of information and transactions. The working papers ensure that all the working observations and any relevant data were noted. The importance of audit work papers are mentioned below: -
- The most important reason auditors use working papers is to act as guidance for the auditors to check the relevant schedules. The working papers help the audit company follow the audit plan devised by them and ensure that all the strategies are properly followed to address the audit issue.
- The workpapers are mandatory for ensuring the quality control of the audit is not compromised. They are also essential in planning and executing the audit properly.
- The proper audit work paper gives the audit company assurance that the work done by the client's company is proper and complete. They are also proof that the audit company has carried out an effective audit.
- The effectiveness, economy, and efficiency of the audit are enhanced by a proper presentation of the audit work papers.
- The audit working papers are important as they can be used to refer cases in the future. They also help in case of any queries later on and are a very important document that must be stored carefully.
- They have all the facts, up-to-date records, and transactions that help justify the company's action. They also play an important role in justifying the actions done by the auditor.
- The audit work paper is also used as a study material in teaching the audit clerks how the job must be completed. The clerks are also asked to summarize the work and get a clearer understanding of all the documents.
- The audit work paper shows the inefficiency of the client in managing the internal control system in operation. The auditor can also suggest changes and advise the client on avoiding any issues or shortcomings in the future.
- The auditors are given time to prepare the end report without wasting time. The auditor also comes to know whether the assistants have followed the instructions.
- Since the records are stored, they help the auditor with the work in the next year. They also help clear all misunderstandings from previous years, and the new orders can be made based on previous orders.
3. The auditor must avoid any or all unnecessary paperwork
Any excess paperwork will only lead to more trouble and issues for the auditor during the final hours. Also, with excess documents, it is possible to lose the documents easily. Therefore when starting with the work, the auditor must be sure that all the working papers are with them and no papers are missing.
The auditor must be satisfied that all the documents are with them because it is an essential part that comes in support of the auditor's report. It has all the information related to the tax or the regulatory or statutory purposes of the client.
4. Content of the audit working paper
Whenever an author starts with the working paper, the auditor must ensure that the working papers ahs the following information: -
- The paper must write the name of the client.
- The duration covered by the audit.
- The matter or the subject that needs to be covered.
- Reference to the file.
- The signature of the people who drafted the working paper.
- The date on which the paper was drafted.
- If the client's staff prepared the audit working papers, then the date and initial of the audit team staffs that acknowledge they received the paper.
- The staff's signature who carried out the reviews and the date on which the review was conducted.
5. Working paper prepared by the client
Some working papers are prepared by the auditor's team, while the client's team drafts some working papers. In the case of a client's team dating the paper following things must be kept in mind: -
- The audit team should ask for the copies way ahead of time.
- If the auditor retains the working papers, the auditor must agree to the form prepared by the client's staff at an early stage.
- The fact that the author agreed to the client's staff must be included in the audit timetable.
- The person who is responsible for the audit working papers prepared by the client must sign the papers. This shows that the person from the client's staff has approved the paper, and there are no faults in the paper.
Strothman +Co is one of the best audit company in Louisville and has the best working auditors with them.