Atta-ur-Rahman Arif

The auditor should document

matter which are important in

providing evidence to support

the audit opinion and

evidence that the audit was

carried out in accordance

with ISAs.

The material (working papers)prepared by and for or obtainedand retained by the auditor inconnection with the performance ofaudit.

Working papers may be in the formof data stored on paper, film,electronic media or other media.

Working Papers are the written,

private material which an auditor

prepares for each audit to

describe the accounting

information received from his

client, the methods of examination

used, conclusions drawn and the

financial statements prepared.

Working Papers:

• Assist in the planning and performance of

the audit

• Assist in the supervision and review of the

audit work

• Record the audit evidence resulting from

the audit work performed to support the

auditor’s opinion

• Assist in the absence of original records to

support professional opinion

• Tool to defend from any charge or suit against

the auditor for negligence

• It helps in organizing and coordinating of all

phase of the audit work

• Enable the auditor to supervise the work of

audit assistants adequately

• Provides the permanent records of the audit

procedures used and the client data examined

• Provide evidence that a proper evaluation of

internal control was carried out by the auditor

The auditor should prepare workingpapers which are sufficiently completeand detailed to provide an overallunderstanding of the audit.

It should include information onplanning the audit work, the nature,timing and extent of the auditprocedures performed, the resultsthereof, and the conclusions drawnfrom the audit evidence obtained.

Form and content of working papers areaffected by matters such as:

Nature of Engagement

Form of the Auditor’s Report

Nature and Complexity of Business

Entity’s Accounting and InternalControl System

Direction, supervision and review ofthe work performed by the assistants

Audit Methodology and Technologyused

The extent of working papers is a

matter of professional judgment

since it is neither necessary nor

practical to document every matter

the auditor consider.

Auditor should consider what would

be necessary to provide another

auditor with an understanding of the

work performed and the basis of the

principle decisions taken out.

1. Trial balance, adjusting entries ,schedules , reconciliation, summaries ofdata, comments and explanations.

2. Analysis of transactions and balances3. Analysis of significant ratios and trends.4. Information about the legal and

organizational structure of the entries .5. Copies of important legal documents ,

agreements and minutes.

6.Information about the industry,

economic environment and

legislative environment within which

the entity operates.

7.Evidence of the planning process

including audit program and any

change thereto.

8.Evidence of the auditor's

understanding of the accounting and

internal control systems.

9.Evidence of internal control risk

assessment and any revision thereto.

10.Evidence of the nature , timing , and

extent of audit procedure performed

and the results of such procedures.

11.Evidence of the auditor’s

considerations of the work of internal

auditing and conclusions reached.

12.An indication as to who performed theaudit procedures and where they wereperformed.

13.Copies of communication with otherauditors and third parties.

14.Copies of letter or notes concerningaudit matters discussed with the entity.

15.Letters of presentation from entity16.Copies of financial statements andauditor’ report

1. Permanent File:

All documents containing background

information about client of permanent

nature are filed on the file. This file

should carried forward from year to year

and should be kept up to date .

2. Current File:

It contains the audit program and

working papers relating to the year under

review.

Copies of memorandum and article of

association

Extract from important agreements

Particulars of title deeds and similar

documents

Address of registered office, factories

and branches

An organizational chart of the

business.

Flow charts and specimen of the

client's accounting documents

A list of accounting records

Declaration concerning the

submission of accounting

manuals, instructions for the

preparation of the accounts and

index of accounts classification

Internal control questionnaireA copy of letter of engagement.Records of audit work on statutory

recordsRecord of inspection of title deeds, lease ,Notes of internal audit.Copy of instructions to banker issued by

the client.Statement of reserves.Note of principle accounting policies .

The auditor should adopt appropriateprocedures for maintaining theconfidentiality and safe custody of theworking papers and for retaining themfor a period sufficient to meet theneeds of the practice and inaccordance with the legal andprofessional requirements of recordretention.

Working papers are the propertyof the auditor. Although portionsof or extracts from the workingpapers may be made available tothe entity at the discretion of theauditor, they are not a substitutefor the entity’s accountingrecords.