Classification of

Working Paper

Permanent Current Working

Working Paper File Paper File

 Contains information of  contains evidence gathered

continuing significance and conclusions reached
to the auditor in relevant to the audit of a
performing audits particular year
 Example of Example of
Permanent File Current File
 Copies of articles of
incorporation and by laws  Working trial balance

 Major contracts  Audit program

 Engagement letter  Detailed schedules

 Organizational charts  Audit planning memorandum

 major accounting policies  Audit queries and disposition

 List of directors and details of  Extracts of meetings

service contracts with them  Internal control questionaires
 The organization’s name and  Copy of financial statements
history  Lead schedules
Working Trial Balance Extracts of Meeting
 Ownership of Working Papers
 Working Papers are the PROPERTY of the AUDITOR and the CLIENT has
NO RIGHT to the working papers prepared by the auditor.
 It may serve as reference source for the client
 But SHOULD NOT be considered as PART or as SUBSTITUTE for the
CLIENT’S RECORD

Confidentiality of Working Papers

 Working Papers CAN NOT be SHOWN to THIRD PARTIES WITHOUT the
CLIENT’S PERMISSION except for the following circumstances:
- when required by law or when working papers are subpoenaed by court
- when there is a professional right to disclose information
 RETENTION OF WORKING PAPERS
 Working Papers should be retained by the auditor for a period of time
sufficient to meet the needs of his practice and to satisfy any pertinent
legal requirements of record retention.

Purpose of Retention
 To provide evidence for the work done where necessary
 To enable the auditor to follow up his recommendation to the client
 To retain information that is likely to be used for future work
Guidelines for the GENERAL
preparation of REQUIREMENTS OR
Working Papers TECHNIQUES USED
 Completeness and  Headings
Accuracy
 Initials/Date
 Clarity and Understanding
 Indexing
 Pertinence
 Cross-indexing/ Cross referencing
 Logical Arrangement
 Tickmarks
 Legibility and Neatness
 W/P Numbering
 Content
 Memos toFuture Auditors
Sample Working Paper Template
 Auditing
Accounting
Estimates
Risk of
Accounting Material
misstatement
Estimates

Examples
- Allowance for uncollectible accounts Approximation of the
- Loss contingencies amounts of an item in the
- Accrued Revenues absence of a precise
- Deferred Taxes means of measurement
- Warranty claims
- Depreciation & amortization
- Percentage of completion income
Auditor’s Responsibility in obtaining sufficient appropriate evidence as
to whether Accounting estimate is:
- is properly accounted for & disclosed
- is reasonable in the circumstances

Approaches used by Auditors

1. Review and test the process used by management to develop estimate

2. Make an independent estimates
3. Review subsequent events which confirm the estimate made.