Audit Working Papers An audit working paper is a document prepared by an auditor in response to a company's request for an independent opinion on its fi...
Audit Working Papers
An audit working paper is a document prepared by an auditor in response to a company's request for an independent opinion on its financial statements. The auditor's findings and conclusions are documented and included in the company's audit report.
Key elements of an audit working paper:
Independent auditor's opinion: The auditor expresses an unbiased opinion on the fairness of the company's financial statements.
Basis of opinion: The auditor describes the accounting principles and other methods used in preparing the financial statements.
Significant accounting policies: The auditor identifies and explains accounting policies that have been used in preparing the financial statements.
Evaluation of estimates: The auditor makes judgments and assumptions about the accuracy of estimates used in the financial statements.
Conclusions: The auditor summarizes their findings and conclusions and provides a rationale for their opinions.
Purpose of an audit working paper:
Provides assurance to the company's shareholders and creditors that the financial statements are prepared in accordance with generally accepted accounting principles (GAAP).
Establishes a foundation for the auditor's opinion in the audit report.
Serves as a reference document for the auditor's report.
Example:
An audit working paper for a company's financial statements may include a section on the accounting policies used for inventory valuation. The auditor may conclude that the company uses the LIFO method, which is a conservative accounting policy that results in lower expenses but higher income