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Working Paper

Summary

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karryl barnuevo
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35 views3 pages

Working Paper

Summary

Uploaded by

karryl barnuevo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is a Working Paper?

A working paper is a document prepared by an auditor or accountant to support their findings,


procedures, and conclusions during an audit or accounting engagement. Working papers provide
evidence for the auditor's opinion on the financial statements and contain details of the audit work
conducted. These documents include test results, calculations, analyses, and other information gathered
during the audit process.

Working papers serve as the basis for the audit report and act as a record of the audit work completed.
They must be detailed enough to allow another auditor to understand the procedures followed and
conclusions reached, even in the auditor’s absence.

Classification of Working Papers

Working papers are generally classified into different categories based on the type of audit procedure or
information they contain. Some common classifications include:

1. Permanent Working Papers:

o These working papers are retained over multiple audit periods and contain ongoing
information that remains consistent from year to year, such as:

 The client’s legal structure, ownership, and management details.

 Organizational charts.

 Prior-year financial statements.

 Accounting policies and procedures.

 Schedules of fixed assets and liabilities.

 Long-term contracts and agreements.

2. Current Working Papers:

o These working papers pertain to the current audit period and are typically prepared and
used for a single audit cycle. They include:

 Detailed testing of balances (e.g., cash, receivables, inventory).

 Audit procedures and tests conducted during the audit.

 Analytical review work.

 Evidence supporting financial statement assertions.

 Documentation of internal controls testing.

 Findings related to audit risks and material misstatements.

3. Supporting Working Papers:


o These include all documents that substantiate the audit evidence and conclusions
drawn. For example:

 Bank statements, invoices, contracts, and receipts.

 Copies of correspondence or communications with third parties.

 Reconciliation of accounts.

 Test results from substantive and control tests.

4. Summary Working Papers:

o These papers summarize the results of audit tests and procedures and include the
auditor's overall conclusion about the audit work performed. Examples include:

 Summaries of findings, including any significant misstatements.

 Conclusions on audit issues (such as internal control weaknesses or compliance


issues).

 Summarized conclusions on the financial statements.

Confidentiality of Working Papers

Working papers are confidential documents, and their confidentiality is critical for several reasons:

1. Client Confidentiality:

o Working papers contain sensitive client information, including financial data, business
operations, and management decisions. Protecting the confidentiality of this information
helps maintain trust between the auditor and the client.

2. Legal and Professional Obligations:

o Auditors are legally and ethically bound to maintain the confidentiality of client
information under various regulations, such as the International Federation of
Accountants (IFAC) Code of Ethics and local laws governing professional conduct.

o Disclosing working papers without client consent or a legal requirement can lead to legal
repercussions and damage professional relationships.

3. Access to Working Papers:

o Working papers are generally accessible only to the audit team, senior auditors, and
partners involved in the audit. However, access may be granted to others (e.g.,
regulators, in the case of a regulatory review or peer review) under specific
circumstances.

o In some cases, working papers may be disclosed under legal compulsion, such as during
litigation or regulatory investigations. However, auditors must seek client consent and
ensure the disclosure is limited to what is required by law.
4. Retention and Disposal:

o Auditors must retain working papers for a prescribed period, as stipulated by regulatory
requirements (often 5 to 7 years). After the retention period, working papers should be
securely destroyed to prevent unauthorized access or breaches of confidentiality.

5. Client Access:

o While working papers are confidential, the client may request access to them. However,
this is usually subject to specific terms, and the auditor may restrict access to certain
parts of the working papers, especially if they contain sensitive audit procedures or
judgments.

Summary

Working papers play a crucial role in documenting the audit process and supporting the auditor’s
conclusions. They are classified into permanent, current, supporting, and summary working papers.
Confidentiality is paramount, and auditors must handle working papers with discretion to protect client
information and comply with legal and professional standards.

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