What are Audit Working Papers?

Audit Working Papers

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Audit Working Papers

Audit working papers, also known as audit workpapers or audit documentation, are the records prepared and maintained by auditors during an audit engagement. These documents provide a comprehensive and organized record of the audit procedures performed, evidence gathered, and conclusions reached. Audit working papers serve several purposes:

Audit working papers may include various types of documentation, such as:

Audit working papers should be organized, clear, concise, and sufficiently detailed to provide a complete and accurate record of the audit engagement.

Example of Audit Working Papers

Let’s assume an auditor is engaged to perform a financial statement audit for XYZ Company. Here’s an example of how an auditor might document their audit working papers for the testing of accounts receivable:

  1. Audit Objective: To verify the existence, accuracy, and completeness of accounts receivable at the year-end.
  2. Risk Assessment: The auditor identifies a moderate risk of misstatement in accounts receivable due to a history of customer disputes and the possibility of uncollectible accounts.
  3. Audit Procedures:
  • Obtain an aged accounts receivable listing at the year-end and reconcile it to the general ledger.
  • Perform a detailed review of the aged listing for any unusual items, including large balances, long-outstanding amounts, or significant credit balances.
  • Select a sample of customer balances for confirmation, considering risk factors such as account size, past due status, and customer history.
  • Review subsequent cash receipts for selected customers to assess the collectibility of outstanding balances.
  • Assess the adequacy of the allowance for doubtful accounts by reviewing the company’s methodology and historical collection patterns.
  1. Audit Evidence and Results:
  • The aged accounts receivable listing was obtained and reconciled to the general ledger without discrepancies.
  • The detailed review of the aged listing did not reveal any significant issues or concerns.
  • Positive confirmations were sent to a sample of 25 customers, with 23 responses received confirming the balances. Two non-responses were followed up with alternative procedures, including a review of subsequent cash receipts and supporting invoices.
  • Subsequent cash receipts provided evidence that the majority of the outstanding balances were collected shortly after the year-end.
  • The allowance for doubtful accounts was deemed adequate based on the company’s historical collection patterns and current economic conditions.
  1. Conclusion: Based on the audit procedures performed and the evidence gathered, the auditor concludes that the accounts receivable balances are fairly presented in the financial statements.

In this example, the auditor’s working papers provide a clear record of the audit objective, risk assessment, procedures performed, evidence gathered, and the conclusion reached for the accounts receivable section of the audit. This documentation will be retained as part of the audit file for future reference and review.

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