IIA Working Papers

WORKING PAPERS (WP)
IIA Standard 2330

The following is intended to expand on IIA Standards 2330 and 2340 This section concerns the documentation of the work of the internal audit activity by means of working papers, whether in traditional form or recorded on electronic media.
WP FUNCTIONS
i. Working papers that document the audit should be prepared by the internal auditor and reviewed by management of the internal audit activity. The working papers should record the information obtained and the analyses made and should support the bases for the observations and recommendations to be reported. Audit working papers generally: 1- Provide the principal support for the audit communications. 2- Aid in the planning, performance, and review of audits. 3- Document whether the audit objectives were achieved. 4- Facilitate third-party reviews. 5- Provide a basis for evaluating the internal audit activity's quality program. 6- Provide support in circumstances such as insurance claims, fraud cases, and lawsuits. 7- Aid in the professional development of the internal auditing staff. 8- Demonstrate the internal audit activity's compliance with the International Standards for the Professional Practice of Internal Auditing.
ii. Working papers support the audit observations, conclusions, and recommendations. Effectively and efficiently organized working papers help to guide the audit work so that it remains relevant to the audit objectives. a. Thus, an internal auditor should maintain the focus of the audit by considering how the work will affect audit communications. iii. Working papers document information in its numerous forms. They record the observations suggested by this information with regard to the existence or nonexistence of exposure to risk. The information recorded also helps to determine the extent and significance of these exposures and possible corrective action. iv. The information in working papers provides essential background for the internal auditors' technical discussions with audit clients. v. Supervisory review of the working papers, which is itself documented, aids in the control of the audit. vi. Working papers facilitate the coordination of work at different locations and the assignment of responsibilities to personnel. vii. Review of the internal auditors' working papers is one means by which the external auditors may obtain an understanding of the internal audit activity, a s s e s s the competence and objectivity of the internal auditors, and determine the effect of the work of the internal auditors on the external audit. Accordingly, coordination with the external auditors is facilitated when they have access
to the working papers.

viii. The law may require that an organization maintain an effective system of internal accounting control. Working papers can provide part of the required documentation of compliance. For example, in the U.S., the Foreign Corrupt Practices Act establishes such a requirement. Moreover, the Sarbanes-Oxley Act of 2002 requires a public company to issue an annual internal control report that states management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting.
WP CONTENTS
a. The organization, design, and content of audit working papers will depend on the nature of the audit. Working papers should document the following aspects of the audit process: Planning. The examination and evaluation of the adequacy and effectiveness of the system of internal control. The audit procedures performed, the information obtained, and the conclusions reached. Review. Communicating. Follow-up. Audit working papers should be complete and include support for audit conclusions reached. Among other things, audit working papers may include: Planning documents and audit programs. Control questionnaires, flowcharts, checklists, and narratives. Notes and memoranda resulting from interviews. Organizational data, such as organization charts and job descriptions. Copies of important contracts and agreements. Information about operating and financial policies. Results of control evaluations. Letters of confirmation and representation. Analysis and tests of transactions, processes, and account balances. Results of analytical procedures. The audit's final communications and management's responses. Audit correspondence if it documents audit conclusions reached.
b.
SUMMARY REVIEW OF WORKING PAPERS
01- Table of contents 02- Planning checklist An itemized checklist of the steps necessary to complete the audit, such as preparation, initial survey, review of internal controls, etc. A form designating the audit client, the objectives and scope of the audit, the assigned internal auditors, the estimated number of hours required to complete the audit, and the kickoff date. This form is signed by the chief audit executive An interoffice memorandum to the audit client confirming the audit arrangements. Individual items contained in these communications are cross-referenced to specific working papers prepared during the audit and included in this file. Copies of the audit client's responses to the audit communications and interim memoranda. Sometimes cross-referenced to the communications and memoranda. The audit supervisor's and manager's notes on the working papers indicating additional work, changes in the working papers, and other comments. The step-by-step procedures performed on the audit. Brief summaries of significant information, observations, conclusions, evaluations, and alternative recommendations.
03- Authorization form
04- Preliminary memo to the audit client 05- A cross-referenced final audit communication, interim memoranda, and follow-up communications
06- Audit client's written response to audit observations, conclusions, and recommendations
07- Review notes on the working papers
08- Audit work program 09- Summary observations sheets
10- Preliminary survey 10.a- Minutes of opening conference 10.b- Summary of observations made during the onsite tour 10.c- Notes from the study of background materials and copies of relevant documents
11.d- Written description of the audit client's operations 12.e- Analytical review worksheet 11- Review of internal control 11.a- Completed internal control questionnaires 11.b- Flowcharts and descriptions of internal controls 11.c- Worksheets and notes on walk-through tests 11.d- Worksheets on limited tests
A copy of the description of the audit client's operations. Another copy will be placed in the audit client's permanent file Copies may also be included in the audit client's permanent file
11.e- Internal control matrix 12- Worksheets from expanded testing
13- Miscellaneous papers
14- Follow-up working papers
Includes detailed lists of the items selected, the nature of the tests, results, conclusions, and the effects on further audit planning. Working papers prepared to evaluate the audit client's internal control system Various schedules, worksheets, reconciliations, copies of documentation, confirmation letters, interview schedules and notes, etc., organized according to the sequence of steps outlined in the audit work program for specific areas being examined. Papers not conveniently classified in the areas under study in the audit work program. These include such items as notes or observations while performing the audit, notes on relevant telephone conversations and informal encounters with the audit client's personnel and others, and other documentation of information acquired during the audit in addition to that outlined in the audit work program. Various schedules, worksheets, changes in policy statements and procedures, etc., resulting from audit follow-up

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IIA Working Papers

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WORKING PAPERS (WP)

IIA Standard 2330

to the working papers.

SUMMARY REVIEW OF WORKING PAPERS

03- Authorization form

07- Review notes on the working papers

08- Audit work program 09- Summary observations sheets

11.e- Internal control matrix 12- Worksheets from expanded testing

13- Miscellaneous papers

14- Follow-up working papers

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