HOW DO I ... USE PRIOR WORKPAPERS?

Discounting the value of prior workpapers would be a mistake. In fact, auditors should always begin a new assignment by examining workpapers from previous audits. In most instances, workpaper reviews can provide numerous benefits to the current audit, including:

• Facilitating the follow-up process. Workpapers can serve as a reference point for this process, providing an outline of the prior audit findings as well as a list of management's action plans.
• Identifying repetitive deficiencies. If the auditors review more than one set of workpapers and find the same deficiencies repeated, they will know to escalate those matters in the risk assessment and subsequently in their review.
• Avoiding pitfalls. Notes from the prior audit can help steer the current review around problems in areas such as audit procedures, environment, and scope.

Auditors can avoid mistakes associated with prior workpapers largely by referring to them at the right time in the planning process. Workpapers should be used at the beginning of the audit primarily for gathering organizational information, examining prior findings, and accumulating the details necessary to start the walkthrough process. The workpapers should then be referenced again when building the audit program. More specifically, auditors should perform the following steps when conducting a workpaper review:

• Gather background information.
• Conduct the walkthrough.
• Evaluate key controls and assess risks.
• Develop tests.
• Review workpapers.

Following these steps can help internal auditors obtain a fresh look at the audit area. The procedures add very few planning hours to the audit and can strengthen the audit program, as well as improve the quality of risk assessments. Relying too heavily on prior workpapers, or referring to them too early in the audit process, can perpetuate old problems and lead to inefficiencies in the current audit. When used judiciously, however, these important records can help practitioners avoid common mistakes and steer the audit toward a successful conclusion.

Adapted from "Curse of the Prior Workpapers," by Judianne Jones Lange (Internal Auditor, "Back to Basics," August 2005).

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