Transcription of Audit Working Papers
1 Audit Working PapersBy: Tariq Mahmood FCA, ACMAT oday s Key Learnings Types of Working Paper Files Audit Working Papers -Types and Feature Purpose of Audit Working Papers Form, Content and Extent of Working Papers Key Audit Procedures Assembly of Final Audit File Importance of Working Papers Working Papers and TypesWhat are Working Papers ? Material that auditor prepares in connection with performance of the Audit Record of Audit Procedures Performed Relevant Audit Evidence Obtained Conclusions the Auditor Reached Also termed as Audit Documentation Audit File One or more folders or other storage media Physical or Electronic FormTypes of Working Papers Files Permanent Audit File Intended to include data of historical or continuing nature pertinent to current examination Client incorporation documents Business Profile Current Audit File Scope of Work Performed Evidence and Findings Obtained Audit Judgment Exercised Conclusions reached Correspondence File Significant correspondence with senior management Copies of Engagement Letters Significant representationsAudit
2 Working Papers Types & Features Audit Administrative Working Papers Audit Plan Audit Program Time Budget etc. Working Trial Balance Lead Schedules Adjusting Journal Entries and Reclassification Entries Supporting Schedules Analysis of Ledger Accounts Reconciliations Computational Working Papers Corroborating DocumentsFeatures: CompleteandAccurate ClearandUnderstandable RelevanttoSubjectMatter LegibleandNeat IndexedandCrossReferenced KeylegendsandtickmarksPurpose of Audit Working PapersPrincipal Purpose Evidence Auditor s basis of conclusion Evidencethattheauditwasplannedandperform edinaccordancewith: ISAs Applicable legal requirements Applicable regulatory requirementsPrincipal Purposes Basisforplanningtheaudit Assistengagementteammembersresponsiblefo rsupervision.
3 To direct and supervise the Audit work To discharge their review responsibilities Enabletheengagementteamaccountableforits work Recordofsignificantmattersfutureaudits EnableconductofEQAR/EQCR Enableconductofexternalreviews(legal,reg ulatoretc.)Additional Purposes Abasisforstudyofpatternsandtrends Aidininternalstaff sprofessionaldevelopment Detailedsupportingmaterialforuseindiscus sionwithoperatingpersonnel Asourceofevidenceinlitigationandadminist rativeactions Abasisforevaluationofauditperformance Provideback-upmaterialinsupportofauditfi ndings , Content and Extent of Audit Working PapersFactors affecting Factorsaffectingtheform,contentandextent are: Sizeandcomplexityofentity Natureofauditproceduresperformed Identifiedriskofmaterialmisstatement Significanceofauditevidenceobtained Natureandextentofexceptionsidentified Needtodocumentaconclusionorbasisofconclu sion Auditmethodologyandtoolsused Datarecordedonpaper Films ElectronicMedia AnyothermediaForm of Working PapersForElectronicfiles.
4 Back-upfrequently Includethefilenameinfooter DevelopanorganizationmethodContents of Audit Working Papers TableofContent Deliverables AuditReport FinalFinancialStatements+TrialBalance LetterstoBOD(IncludeFinancialStatementsa pprovalminutes) ManagementLetters Otherdeliverables,ifnay EQAR/ReferencingofFinancialStatements EngagementLetter RepresentationLetter AuditCompletion CompletionDocuments IssuesMemoranda SummariesofSignificantMatters DisclosureChecklist(4thor5thScheduleorAp plicableIAS)Contents of Audit Working Papers AuditPlanning PlanningDocument Planninganalysis MaterialityCalculations ResponsibilityMatrix RiskAssessmentDocumentsincludingFraudRis kAssessment AssessmentonOtherAreas(planningandworkdo ne) SubsequentEvents GoingConcern CompliancewithLawsandRegulations RelatedParties InternalAuditFunction InvolvementofSpecialists Others,asrequiredContents of Audit Working Papers Discussions Correspondence(includingemails)
5 EntityManagement ThirdParties Copyofrequirementlistsubmittedandstatus Othercorrespondence CompanyIncorporationDocuments/updates DetailedHead-WiseWorking MiscellaneousdocumentsStructure of Head-Wise Working LeadSchedule AuditPrograms Sub-Leads Break-upsandSchedules FileNotes/AuditNotes Proceduresperformedandresultsthereof Analysisandcomputationsperformed ReportsofSpecialists,ifany ConfirmationLetters,asapplicable ManagementCertificates/SpecificRepresent ations,asapplicable Cash, Inventory OthersStructure of Head-Wise Working Abstractsorcopiesofentity srecords Partnershipdeeds/Shareholdingagreements AOA/MOA TrustDeeds LeaseAgreements KeyContracts PoliciesManuals(keyExtracts) MinutesofSignificantMeetings(ResolutionC opies) CopiesofCut-offdocuments Significantcalculationsbyclients Assetregisters/inventorylistings,reconci liationsetc.
6 Copiesofsampleinvoices,vouchers Copiesofothersupportingdocumentsasrequir edElements of Working Paper NameoftheClient PeriodCoveredbytheAudit SubjectMatter Indexing/FileReference Initials(signaturesofstaffwhoprepared) Datewhenprepared Initials(Signatureofstaffwhoreviewed) Datewhenreviewed Incaseofworkingpaperpreparedbyclientstaf f Datetheworkingpaperswerereceived Initialsoftheauditteammemberwhocarriedou ttheauditworkExceptions and Tick Marks Exceptions AuditExceptionsshouldbedocumentedandexpl ainedclearlyoneachworkingpaperusinglogic alnumberingthatcrossreferencetootherwork Papers TickMarkLegend Symbolsusedbytheauditortoindicatethenatu reandextentofprocedure Arenotionsdirectlyontheworkingpapers Generallydonebyhandalongsideaspecificite m ,Vmeansthattheitemyou , ,havingnopreviousconnectionwiththeauditt ounderstand: Nature,timingandextentofauditproceduresp erformed Identifyingcharacteristicsofspecificitem sormatterstested.
7 SelectionMethod,Samplesselection, TypesofTestsperformed,auditproceduresper formed Whoperformedtheauditwork; Datesuchworkwascompleted Whoreviewedtheauditworkperformedanddatea ndextentofsuchreview Resultsofauditproceduresperformed AuditevidenceobtainedExtent of Audit Procedures and Audit Evidence PhysicalExamination Observation Confirmation Tracing Vouching Inspection Reconciliation Reperformance AnalyticalProcedure Inquiry Comparison Re-calculationTypes of Audit Procedures FixedAssets CapitalWorkinProgress Investments Inventories TradeDebtors AdvancesandDeposits PrepaymentsandOtherReceivables CashandBankBalances ShareCapital Reserves DeferredLiabilities LongTermLiabilities LeaseLiabilitiesDiscussion on Key Head of Accounts TradeCreditors AccruedExpense OtherLiabilities ContingenciesandCommitments Revenue CostofSales OtherIncome
8 AdministrationandGeneralExpenses SalesandMarketingExpenses FinanceCost CashFlowWorking WorkingonGoingConcern,ifanyDiscussion on Key Head of Accounts Significantmattersarisingduringauditincl uding: Mattersthatgiverisetosignificantrisk Resultofauditproceduresindicatingthat: Financialstatementscouldbemateriallymiss tated Needtorevisethepreviousassessmentoftheau ditrisk Circumstancescausingdifficultyinapplying necessaryauditprocedures Findingsresultinginmodificationofauditop inionSignificant MattersImportant for review and subsequent auditsDocument:-Conclusion reached thereon; and-Significant professional judgments made in reaching those conclusions Discussionofsignificantmatterswith: Management Thosechargedwithgovernance Amongengagementteam Incaseofinformationidentifiedisinconsist entwiththeauditor sfinalconclusion,documenthowtheinconsist encywasaddressed?
9 Discussions and ,howtheyaddressed(CompletionMemorandumor AuditSummaryMemorandum) Incaseitisnecessarytodepartfromarelevant requirementinanISAorotherlegalandregulat oryrequirement,document: Reasonfordeparture Alternativeauditproceduresperformed Howthealternativeprocedureachievedtheaim ofrequirementDeparture from Relevant :-TheentireISAisnotapplicable-Therequire mentisconditionalandtheconditiondoesnote xist Auditorperformsneworadditionalauditproce dures Newconclusionisdrawnafterthedateofaudito r sreportMatters arising after the date of auditor s report Subsequent EventsDocument:-Circumstanceencountered- Neworadditionalproceduresperformed- Audit evidenceobtained-Conclusionreached-Effec tonauditor sreport-Whenandbywhomtheresultingchanges weremadeandreviewedSpecific Audit Documentation requirements in / Brief DescriptionParaISA 210 Agreeing the terms ofaudit engagement10-12 ISA 220 Quality Control for an Audit of financial statements24-25 ISA 240 The auditorsresponsibilities relating to fraud44-47 ISA 250 Consideration of laws and regulations in an audit29 ISA 260 Communication with those charged with governance23 ISA 300 Planningan Audit of financial statements12 ISA 315 Identifying and assessingthe risk of material misstatement32 ISA 320 Materiality in planning and performing an audit14 ISA 330 The auditor s
10 Responses to assessed risk28-30 ISA 450 Evaluation of misstatements identified during audit15 ISA 540 Auditing accounting estimates and related disclosures23 ISA 550 Related parties28 ISA 600 Special considerations Audit of Group F/S50 ISA 610 Using the work of internal auditors36-37 Should not be included Whatisnotrequiredtobeincluded? Supersededdraftsofworkingpapersandfinanc ialstatements Notesthatreflectincompleteorpreliminaryt hinking Previouscopiesofdocumentscorrectedforerr ors DuplicatedocumentsOralexplanationsbythea uditor,ontheirowndonotrepresentadequates upportforthework,theauditorperformedorth econclusiontheauditorreached, for Small Entities Auditdocumentationislessextensive Incaseworkperformedbyengagementpartnerhi mself,documentswillnotinclude: Mattersrequiredtobedocumentedtoinformori nstructengagementteammembers; Toprovideevidenceofreviewbyotherteammemb ers.
