What makes a good audit working paper?
An audit working paper records the work done, the evidence obtained and the conclusion reached. A well-designed one is clear, standard and traceable enough for someone who did not do the work to see how the conclusion was reached.
An audit working paper is the record that documents which procedure was applied in an audit or review, what evidence was obtained and what conclusion was drawn from it. A working paper does not only show that the work was done; it shows how it was done and why the conclusion holds.
The quality of working papers cannot be separated from the quality of the audit itself. Undocumented work cannot be reviewed, handed over or defended later.
Five features of a good working paper
| Feature | Meaning |
|---|---|
| Clear purpose | It is obvious at first glance which account, assertion or risk the paper addresses. |
| Traceability | Every number links to its source (trial balance, document, reconciliation) and can be traced back. |
| Standard structure | Papers of the same type have the same sections; the reader knows where everything is. |
| Conclusion | The result of the work is written down; any finding is stated with its effect and how it was dealt with. |
| Review trail | Who prepared it, and who reviewed it when, is clear. |
Suggested structure
- Header: company, period, account/area, paper reference, preparer and reviewer.
- Purpose: which risk or assertion (existence, completeness, valuation, cut-off and so on) does this paper address?
- Source data: the trial balance, listing or report used, and its reconciliation to the trial balance.
- Procedure performed: what was done, how the sample was selected, which documents were examined?
- Findings: differences identified, their amounts and causes.
- Conclusion: the status of the account or area for the relevant assertion.
- Cross-references: links to related papers and summary schedules.
The benefit of standardisation
In a team where each auditor prepares working papers in their own way, review takes longer and quality varies from person to person. Standardising templates:
- Speeds up review, because the reviewer finds the same information in the same place on every paper,
- Makes onboarding easier for new team members,
- Allows prior-period papers to be reused,
- Prepares the ground for linking papers digitally and for automated checks.
Digital working papers and reuse
When working papers are designed in a spreadsheet or software environment, source data can be imported directly, reconciliation to the trial balance can be automated and last period’s structure can be carried into the new period. The auditor’s time then goes to areas that require judgement rather than to moving data.
The point to watch is that automation must not hide the logic of the paper. Formulas and links should stay transparent enough for a reader to follow the calculation.
Working papers and data analytics
The results of analyses run on the full set of entries should also be part of the working paper: which data was used, which criteria were applied, how many entries were flagged and how they were examined. You can find examples of such analyses in What can e-ledger data reveal?
For the general framework, see the audit and financial control page.
Frequently asked questions
What is the difference between a working paper and an audit report?
A working paper is the internal record of the work and is used within the audit team. The report communicates the result to external users. The report rests on the working papers.
How long should working papers be kept?
The retention period is set by the relevant professional rules and legislation. The applicable period should be confirmed against current regulations for the type of engagement.