Audit Working Papers
Bv JAMES W. CRAFT In-Charge Accountant, Atlanta Office
Presented before Alpha Beta Chapter of Beta Alpha Psi, University of Alabama, Tuscaloosa — December 1960
WORKING PAPERS are the basic product of your audit work; they are a permanent record of your investigation and are the basis for reports to clients and for use of clients in reporting to governmental agencies and others.
WHY ARE THEY PREPARED?
The why of audit working papers is obvious. They form the basis of opinions expressed in reports, and when properly prepared, they are valuable for succeeding engagements for comparative purposes and obtaining information regarding any unusual features of the engagement.
They should co-ordinate and organize the verification of various accounts; they should contain opinions as to the various phases of the audit so as to substantiate the over-all opinion expressed in the report.
WHAT IS THEIR CONTENT?
Working papers should be filed in some logical manner so as to facilitate easy reference and use. Generally, working papers should contain a general-ledger trial balance, adjusting journal and reclassification
entries, excerpts of corporate minutes, results of the investigation
of internal accounting control, memorandum of instructions and requirements on the engagement, memorandum of the results of the investigation of events subsequent to the balance-sheet date, a record of the time spent on the engagement, and analyses of accounts properly indexed to the general-ledger trial balance. Each analysis should contain
the source of information, the nature of the transactions in the account, your investigation and tests, dates of important transactions, and your conclusion as to the correctness or reasonableness of the account or group of accounts. In stating your conclusion, it is not necessary to state an opinion on each analysis, but a statement such as "no exceptions or unusual items and fluctuations were noted" is acceptable.
Working papers should also include a separate folder regarding
information of continuing interest, usually referred to as the permanent working-paper file. It should contain information such as