Work Papers

Auditors create work papers to document their work. This body of work is basis for proper audit opinions. Below I provide work paper tips to help you create clear communications. 

Work papers  

A common peer review finding for CPA firms is a lack of sufficient documentation. The peer reviewer gives no credit if the work is not documented. And this can result in findings in the review.

Therefore, create work papers that communicate clearly what is done. 

All too often planning deficiencies result in peer review findings. Many auditors check the boxes on planning forms but don’t really audit. But completing forms is not the same as auditing. So as you create your file, remember plan first, and then respond. 

In other words, perform risk assessment procedures such as walkthroughs. Then assess risk. And, next, create your audit plan. Only then should you perform substantive procedures.

It’s the details that often make the difference in good work and poor work. Therefore, I am providing tips for better work paper documentation.

Work Paper Tips

Here are steps for better work papers:

  • Sign off on all audit programs
  • Clearly reference your work 
  • Document your understanding of the entity
  • Prove your understanding of controls with walkthroughs
  • State your expectations in preliminary analytics
  • Create an engagement letter that covers all duties
  • State your nonattest services and why they don’t impair your independence
  • Create a document showing bias in estimates are not present
  • Use purpose and conclusion statements
  • Name the persons you interview as well as dates
  • Provide the basis for your inherent risk assessments
  • Test controls if control risk is less than high
  • Assess risk at the assertion level
  • Document financial statement level risk such as management override
  • Link your risk assessment to responses (audit steps)
  • Tailor your audit programs to work to be done
  • Leave unnecessary documents out of the file
  • Remember you’re communicating, not just documenting
  • Make your messages clear
  • Clearly define tickmarks
  • Review work papers in a timely manner
  • Remove review comments from the file