Documentation Flashcards
the purpose of working papers are:
- to allow the audit partner to form an appropriate opinion
- to be our defence in a negligence case that was carried out correctly and completely
Give six reasons why assurance providers record their work.
assist the audit team to plan and perform the audit
assist relevant members of the team to direct and supervise work
enable the audit team to be accountable for its work (and to prove adherence to ISAs in a litigious situation)
retain a record of matters of continuing significance to future audits
enable an experienced auditor to carry out quality control reviews
enable an experienced auditor to conduct external inspections in accordance with applicable legal, regulatory or other requirements
working papers should show:
- name of client
- reporting date
- file reference
- name of preparer/date
- name of reviewer/date
- subject of working paper
- objective
- source of information
- sample size
- work performed
- results and conclusions drawn
- analysis of errors
What are three advantages of automated working papers?
The risk of errors is reduced.
The working papers are neater and easier to review.
The time saved is substantial as adjustments can be made easily to all working papers, including working papers summarising the key analytical information.
What do permanent audit files contain?
They contain any information of continuing importance to the audit. These may contain:
engagement letters
new client questionnaire
the memorandum and articles of association
other legal documents such as prospectuses, leases, sales agreements
details of the history of the client’s business
board minutes of continuing relevance
previous years’ signed accounts and analytical procedures
accounting systems notes, previous years’ control questionnaires
What do current audit files contain?
They contain any information of relevance to the current year’s audit and should be prepared on a timely basis. These may contain:
financial statements
accounts checklists
management accounts details
reconciliations of management accounts and financial statements
a summary of unadjusted errors
report to partner including details of significant events and errors
review notes
audit planning memorandum
time budgets and summaries
written representations from management
notes of board minutes
communications with third parties such as experts or other auditors
A lead schedule including details of the figures to be included in the accounts
Problems encountered and conclusions drawn
Audit plans
Risk assessments
Sampling plans
Analytical procedures
Details of tests of detail and tests of control
What is the minimum period, as required by ICAEW, for which audit working papers must be retained by the auditor?
ICAEW requires that all firms should have a document retention policy and that Registered Auditors should keep all audit working papers required by auditing standards for at least six years from the end of the
accounting period to which they relate.
To whom do working papers belong?
Working papers belong to the assurance providers.
To whom does the report belong?
The report, once issued, belongs to the client.
