Audit working papers represent the documents prepared and filed by auditors as the evidence of the audit process. The documents will include standard information often required by national audit standards to prove that audits were planned properly and performed with adequate supervision, that fieldwork steps were appropriate and followed accordingly, and sufficient evidence is available to support the audit opinion. Most accounting firms will retain audit working paper indefinitely. Any legal action coming forth as the result of an audit may require the firm to prove its audit process is adequate and proper. Other papers may be included with the standard working papers.
All audits will follow a specific plan prior to the fieldwork phase. Accounting and/or audit firms must present information to clients regarding the suggested audit plan. The plan will dictate the size and scope for the article to ensure auditors select an appropriate sample of accounting paperwork. The planning documents will often detail the steps taken to select a sample, as this is a critical part of the audit planning process. Failing to provide information on the sampling process can result in the inability to prove why the auditors felt their sample was a representative picture of the client’s accounting information.
Audits must have adequate supervision by a lead auditor or partner from the accounting firm. Most audits will require the supervisor to sign off on all audit working papers. This signature provides assurance that all steps taken to properly audit client worksheets, journals, ledgers, or other documents followed proper auditing standards. Lead auditors may also need to make decisions about selecting a second sample for testing or write notes on documents to provide a further explanation on an audit fieldwork process. Failure to provide information on the adequate supervision of audits can void the entire audit and subject accounting firms to heavy penalties. Audit working papers prepared by unqualified individuals are typically unable to support the final audit opinion.
Because the fieldwork phase is often the most important part of the audit process, a large majority of audit working papers will come from this process. All working papers prepared by auditors working on the audit will fall into this category. Most clients will make a copy of their accounting paperwork for the time period selected by the auditors. These papers will then become the property of the accounting firm. Auditors will test these documents for accuracy and create a file to retain these documents in the accounting firm’s storage. Lead auditors typically will create a file and provide an overview of the audit working papers for easy review by individual not working on the audit.