Auditing Documentation: Purpose, Characteristics, and Types
Definition of Working Papers
Working papers are records prepared by the auditor. They document the work performed, the information collected, and the methods, procedures, and tests conducted, along with the conclusions reached. They serve as supporting documentation for each and every action taken by the auditor.
Objectives of Working Papers
The basic objectives are:
- Collecting evidence from the implementation of the work and the means by which the auditor has formed an opinion.
- To be useful in carrying out the supervisory work of the audit team.
- To assist the auditor in carrying out their work.
- To be useful in systematizing and developing, through experience, future audits.
- To make it possible for anyone with experience to oversee the legal action taken.
- To test the quality of work.
Characteristics of Working Papers
Working papers must be sufficiently clear to allow an auditor with no previous knowledge of the audit to follow the work’s incidences and check that the audit has been conducted according to technical standards. The working papers must be: full, clear, and concise. Clear working papers should allow an auditor who is not doing the work to understand and draw valid conclusions. There are many degrees of clarity, as there are individuals who prepare the working papers, but for good practice, they must meet certain minimum requirements:
- Spell checking and language: Legible letters, understandable language, appropriate explanations, lack of ambiguity, and no excessive information.
- Consistency in terms of appearance and size, highlighting important texts.
- Correct nouns: People, societies, places, brands, etc.
- Reference System and brands, simple and small, with appropriate explanations.
Types of Working Papers
Working papers are based on worksheets, summary, and detail.
- Worksheets Base: Collect the summary of all accounts in an area or section. They serve to bring together all areas of the balance sheet and income statement.
- Worksheets Short: These are those in which the composition of each of the accounts of an area or section is presented.
- Worksheets Support Base.
- Worksheets Detail: They detail specific aspects of summary worksheets to support and serve them.
References in Working Papers
References in worksheets are alphanumeric characters, which are designed to sort the working papers, providing management and file and link the data between worksheets. The calls, also marks, tildes, or ticks, are symbols used to leave evidence of the work and explain the material considered.
Audit Files
- General File: A coherent set of documents containing information relating to the audited financial statements for the year in question.
- Permanent File: A coherent set of documents containing information of permanent interest, which may have implications in subsequent audits.
Characteristics of Audit Reports
The audit report must be clear, objective, concise, and timely.
- Sure: The auditor clearly expresses their opinion.
- Objective: It must be supported by the auditor’s working papers.
- Concise: You must evaluate the audited annual accounts as soon as possible.
- Timely: You have an opinion on the financial statements on the facts that occurred after closing the accounts, but before the issuance of the report.
Adjustments and Reclassifications
- Adjustments: They provide a quantitative impact on the estate or the results, as they reflect facts omitted or improperly accounted for (failing to register certain risks or supplies, with corresponding impact on results).
- Reclassifications: They provide a qualitative impact on the property, and if the correction is substantial, the material may be important (tangible assets recorded in inappropriate accounts).