What are work papers and what are they for?

The working papers will be familiar to almost anyone involved in the accounting profession. But despite its name, today's job papers don't require "paper" at all. We will explain all the details below.

First of all, working papers are summary documents that accountants and auditors use to prepare financial statements. They act as supporting documentation that organizes and supports the information found in management reports and financial statements, and they also summarize information found in other customer documents.

While they are an essential part of any accounting practice, their preparation has a well-deserved reputation for being manual, arduous, and time-consuming.

One of the most common forms of work papers is a worksheet. Worksheets are used to summarize year-end accounting processes, publish adjusted journal entries, create trial balances and prepare financial statements.

Other working papers are used to track and record customer records for accounts receivable, purchases of fixed assets, and liabilities. In most cases, accountants' working papers are extremely detailed because they represent the findings and evidence of accountants at work.

Auditors should prepare and organize their working papers in a way that assist the auditor in conducting an appropriate audit service. The auditor should avoid preparing or accumulating unnecessary working papers and therefore should avoid making extensive copies of the client's accounting records. It is worth noting at this stage that it is neither necessary nor feasible for the auditor to document all matters considered during the audit.

Importance of working papers

Work papers are important because:

• They are required for audit quality control purposes.
• Ensuring that the work delegated by the audit partner has been completed correctly.
• Provide evidence that an effective audit has been performed.
• Increase the economy, efficiency and effectiveness of the audit.
• Contain sufficiently detailed and have updated facts that justify the reasonableness of the auditor's conclusions.
• Maintain a record of matters of continuing importance for future audits.

Before deciding to prepare a particular audit engagement paper, the auditor should be satisfied that:

• It is necessary, either because it will serve an essential or useful purpose in support of the auditor's report, or because provide the necessary information for tax or other statutory / regulatory purposes related to the client
• It is not feasible for the client's staff to prepare the working paper, or for the auditor to make copies of the documents that the client's staff (including internal auditors) have prepared as part of their duties usual.

Contents

Usually, Each audit engagement paper should be headed with the following information detailed below:

• The name of the customer.
• The period covered by the audit.
• The matter.
• The file reference.
• The initials (signature) of the staff member who prepared the working paper and the date it was prepared.
• For audit papers prepared by client personnel, the date they were received the working papers and initials of the member of the audit team who carried out the audit work audit.
• The initials of the staff member who reviewed the working papers and the date the review was conducted.
• Each audit document should meet the characteristics of a good working paper, as detailed later in this article.

Some characteristics of a good job paper

1. You must establish a clear audit objective, usually in terms of an audit assertion (eg, "to ensure the integrity of trade accounts payable").
2. You must fully indicate the end of the year / period (for example, October 31, 20X9), so that the work paper is not confused with the documentation that belongs to a year / period different.
3. You must indicate the full scope of the test (that is, how many items were tested and how this number was determined). This will allow the preparer, and subsequent reviewers, to determine the sufficiency of the audit evidence provided by the engagement paper.
4. When a reference to another job role is required, the full reference to that other job role must be provided. A statement that the details of the tests can be found in "other working paper" is insufficient.
5. The working paper should state the test results clearly and objectively, without bias and based on documented facts.
6. The conclusions reached must be consistent with the test results and must be able to withstand independent scrutiny.
7. The working paper should have a clear reference so that it can be properly filed and easily found when needed at a later date.
8. It must be signed by the person who prepared it so that inquiries can be directed to the appropriate person.
9. It must be signed and dated by anyone who reviews it, in order to meet the quality control requirements of the review.
10. The reviewer of audit engagement papers should ensure that all papers have these characteristics. If any relevant feature is deemed to be missing, this should result in a review point of the audit (i.e., a comment from the reviewer directing the original preparer to rectify the flaw in the job).

Work papers provide evidence that an effective audit has been performed, efficient and economical.

Therefore, they must be prepared carefully and skillfully. They must be sufficiently detailed and complete so that an auditor with no prior experience in that audit can understand the working papers in terms of the work completed, the conclusions reached and the reasoning behind them conclusions.