By preparing the work papers, the Public Accountant records the work carried out to issue his professional judgment
The International Federation of Public Accountants (IFAC) was founded on October 7, 1977, as a result of an agreement signed by 63 professional associations of Public Accounting that represented 49 countries. The objective of the Federation is the development and strengthening of the accounting profession, coordinated worldwide with harmonized standards.
To meet this objective, the IFAC Council has established the International Auditing Practices Committee (IAPC), to develop and issue on behalf of the Council, Standards on Generally Accepted Auditing Practices (NAGA), related services and on the form and content of audit reports.
The International Standards on Auditing issued by the IAPC are not imposed on the laws or regulations of each country. In cases where the norms of a country are in conflict on a particular matter, the member associations must act seeking their harmonization.
In this particular case, the issue of working papers and their incidence and importance in the auditors 'examination of the organizations' accounting information will be discussed.
General
The working papers comprise all the documents prepared or received by the public accountant, so that, as a whole, they constitute a compendium of the information used and the tests carried out in the performance of their work; along with the decisions that you have had to make in order to form your opinion.
Public accountants must establish and keep working documents that may constitute the proper evidence of their performance, aimed at forming their opinion on the accounts they have examined. Working papers should be prepared as the audit engagement is completed and should be detailed and clear enough to allow an accountant without prior knowledge of the audit in question to follow up on the occurrences of the audit.
Unit
The work papers are prepared in accordance with the Generally Accepted Auditing Standards by means of the work papers, the public accountant will record the work carried out to issue his professional judgment. Such papers, which are the sole property of the accountant, are prepared in accordance with generally accepted auditing standards (NAGA).
The working papers may be examined by state entities and by officials of the jurisdictional branch in the cases provided by law. Said papers are subject to reservation and must be kept for a period of not less than five years, counted from the date of their preparation.
These papers that the accountant prepares and maintains, are supports that the professional must prepare to demonstrate compliance with the generally accepted auditing standards in this case, which says that «Valid and sufficient evidence must be obtained through analysis, inspection, observation, interrogation, confirmation and other audit procedures, with the purpose of providing reasonable bases for the issuance of an opinion on the financial statements subject to review ».
The working papers can take the form of accounting sheets, which allow the analysis of accounting accounts.
These forms can be summary or detailed. Others may include copies of correspondence, extracts from minutes of shareholders' meetings and boards of directors, organization charts, audit programs, internal control questionnaires, confirmations obtained from clients, certifications, etc.
These spreadsheets, analysis sheets, lists, documents, which make up the work papers, duly classified and commented, show that:
- The work has been adequately planned and supervised as required by the NAGA. The internal control has been studied and evaluated to determine the audit procedures. The bases for preparing the report, the scope of the work and the professional responsibility acquired in the review.
The obligation for the public accountant starts from the laws that regulate the profession of the public accountant to perform the audit of an organization.
Objectives of the working papers
The fundamental objectives of the working papers are:
- Facilitate the preparation of the report. Check and explain in detail the opinions and conclusions summarized in the report. Provide information for the preparation of tax returns and report for the state control and surveillance agencies. Coordinate and organize all phases of the work. Provide a permanent historical record of the information examined and the auditing procedures applied Serve as a guide in subsequent reviews Comply with legal provisions
Fundamental principles of working papers
To perform the job in accordance with professional standards, the CPA must attach importance to the preparation of working papers. To fulfill this purpose, you must first carry out a complete job and free of superfluous information and organize the work papers in a way that facilitates the quick location and easy understanding by other people.
The working papers are considered complete when they clearly reflect the significant data contained in the records, the verification methods used and the additional evidence necessary for the formation of an opinion and preparation of the report.
In addition, they must clearly identify the informative expressions and the elements of judgment or criterion.
Any information or figures contained in the public accountant's report must be supported in the working papers.
As the professional progresses in his work, he should consider the problems that may arise in the preparation of his report and anticipate including in the working papers, the pertinent comments and explanations. Extensive explanatory comments should be made to any spreadsheet or analysis prepared during the job.
The working papers are not limited to quantitative information, therefore, they should include notes and explanations that fully record the work performed by the public accountant, the reasons that helped him to follow certain procedures and omit others and his opinion. regarding the quality of the information examined, the reasonableness of the internal controls in force and the competence of the people responsible for the operations or records subject to review.
These should also be reviewed by supervisors to determine the adequacy and efficiency of the work of the assistant subject to supervision.
In such reviews, the working papers should speak for themselves; be complete, legible and systematically organized, in such a way that no additional information and interpretations are required from the person who prepared them.
It must be borne in mind that many times, the report is not prepared by the person who carried out the examination but by a supervisor, who must be in a position to fulfill his / her mission without the need to continually question the assistant responsible for preparing the inspection papers. job.
Proper preparation of job papers requires careful planning before and during the course of the job.
Planning and content of working papers
As the verification process develops, the person must review the material to be covered, trying to visualize the type of paper that presents the evidence in the most effective way.
Alternatives exist in preparing a particular type of working paper.
It is convenient to study the form of the identity card or analysis sheet used in similar jobs or in the same job in a previous opportunity.
In some cases, the previously used form can be copied without making any changes and in other cases the old form may be considered totally inappropriate.
A worksheet is regularly used for each item or account subject to analysis or verification, however, there are occasions when work papers that cover different interrelated accounts are appropriately combined.
Preparation: The work papers must be prepared with due attention to planning, conception and legibility.
In some circumstances, it is convenient to show related information such as documents payable, interest paid, depreciation, expenses and all related to the execution of the work in a single worksheet.
The worksheets must have a standard, which is an essential requirement for their proper and careful filing in the work papers file.
Since the working papers include all the information obtained by the Public Accountant, there are innumerable varieties and types of them. However, there are certain general categories from which most working papers could be grouped.
- Audit programs Questionnaires and point sheets pending investigation Worksheets related to the balances of control and auxiliary accounts Worksheets with the results of compliance tests Questionnaires with evaluation of controls Adjustment and adjustment entries Reclassifications Schedules, analysis sheets and other supporting papers Extracts of minutes and other narrative papers Certifications and confirmations Articles of incorporation and amendments Drafts of the opinion of the Financial Statements and the notes.
Audit records
The working papers will contain the necessary files or files according to the size of the entity being examined, but two classes of files are regularly classified for each entity:
- The record or records of the annual work that belongs exclusively to the examination or review of the year or period covered The record or records of the permanent file that contains the information that normally does not change from one period to another and therefore does not need to be duplicated. The permanent archive fulfills, among others, the following objectives:
- Refresh the Public Accountant's memory about items applicable to various exercises. Provide new assistants with a brief summary of the client's policies and organization. Keep work papers for items corresponding to items showing relatively little or no change., consequently eliminating the need for their preparation exercise after exercise.
The permanent file must have an index that allows quick reference to the working papers that the accountant used to make his evaluation.
Most of the information contained in the permanent file is obtained in the course of the first year of work and a considerable part of the time invested in the first job is devoted to obtaining and evaluating general information such as:
- Extract or copy of the deed of incorporation of the entity Catalog of accounts, procedure manuals and established accounting policies Rules of issue of shares and obligations Contracts of leases, patents, actuarial study of retirement pensions, profit sharing and bonuses, long-term obligations contracts and guarantees. Organization charts and scope of authority and responsibility of the officials. Plant conditions, manufacturing processes and main products. Extracts from minutes of the general shareholders' meetings and the board of directors. Analysis of permanent accounts such as land, capital stock and long-term liabilities.
This information should be carefully kept by the Chartered Accountant in the permanent record file, so that it can avoid unnecessary repetition of the work during subsequent examinations.
With this information properly classified and studied, the work can be planned more efficiently, the new assistants can consequently obtain a convenient disposition towards the entity's policies and problems. In order for the permanent file to fulfill its objective, it must be updated in the course of each job, making any changes that may be necessary.
Rules for preparing working papers
Working papers should be prepared with due regard to planning, conception, and readability, with full titles and explanation as to the source.
The working papers should give an impression of methodology and order of conscious attention to detail coupled with a clear distinction between the important and the trivial.
Working papers should be carefully protected and filed so that they can be easily located and consulted. The following rules must be observed in the preparation of working papers:
- Each worksheet must be properly identified with the name of the entity, a description of the information presented, the period covered, and one or more separate sheets must be used for each subject. Any information of sufficient value to require inclusion in the working papers deserves a complete sheet on its descriptive title. Each working paper must contain the name or initials of the person who prepared them, the date it was prepared and the name or initials of the job manager and the supervisor who reviewed them.
The complete and specific identification of the analyzed accounts, interviewed employees and the documents examined is essential to achieve a good job.
The working papers should contain indexes that relate them to the worksheet. A summary sheet must be prepared for each control account or basic function, to which all detailed work papers refer.
In applying these recommendations and as the review progresses, a sheet or list of issues pending investigation should be developed.
In the course of the review, problems arise that cannot be solved immediately and by listing these points, a review for this purpose is postponed for review.
The list of pending issues must be reviewed and each point satisfactorily resolved.
