HOW DO I ... PRODUCE QUALITY WORKPAPERS?
The main goal of an internal auditproject is to add value and improve an organization’s operations. This goal is accomplished through the identification of control weaknesses, potential process improvements, and positive change opportunities. While the organization, design, and content of audit workpapers will vary depending on the nature of the engagement, several important considerations are necessary to the creation of effective, high-quality workpapers.
According to Practice Advisory 2330-1: Recording Information from the International Standards for the Professional Practice of Internal Auditing (Standards), audit workpapers should be prepared to achieve four main objectives:
- Document the planning, performance, and review of audit work.
- Provide the principal support for audit communication such as observations, conclusions, and the final report.
- Facilitate third-party reviews and re-performance requirements.
- Provide a basis for evaluating the internal audit activity’s quality control program.
Audit workpapers serve a variety of purposes and impact many different stakeholders, both within and outside of the internal audit function.
There are five essential characteristics of high-quality workpapers that all document preparers should consider throughout the audit process.
- Completeness. Each workpaper should be completely self-standing and self-explanatory.
- Accuracy.High-quality workpapers include statements and computations that are accurate and technically correct.
- Organization. Workpapers should have a logical system of numbering and a reader-friendly layout so a technically competent person unfamiliar with the project could understand the purpose, procedures performed, and results.
- Relevance & Conciseness. Audit workpapers and items included on each workpaper should be relevant to meeting the applicable audit objective.
Workpapers should include the following key elements:
- Source. The name and title of the individual providing the documentation should be recorded to facilitate future follow-up questions or audits.
- Scope. The nature, timing, and extent of procedures performed should be included on each workpaper for completeness.
- Reference. A logical workpaper number cross-referenced to audit program steps and issues should be included.
- Sign-off. The preparer’s signature provides evidence of completion and accountability, which is an essential piece of any third-party quality review.
- Tick mark legend. A concise definition of all tick marks should be included on each audit workpaper or at a central location to clearly describe the work performed during the engagement.
- Exceptions. Audit exceptions should be documented and explained clearly on each workpaper using logical numbering that cross-references to other workpapers.
The consistent inclusion of these key workpaper elements on all audit documentation improves the efficiency of internal and external review processes.
Adapted from "Producing Quality Workpapers" by Brian Wueste (Internal Auditor, "Back to Basics," December 2008).
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