What are Working Papers in Auditing?

Audit working papers are the systematic documentation that auditors prepare during the audit engagement to support their conclusions and meet professional standards. These documents form the basis for the audit opinion and ensure quality and traceability in the audit process.

What are Working Papers?

Working papers are all documents and records that the auditor prepares or obtains during the audit engagement. They document:

• Audit Planning: Strategy, Risk Assessments and Approach
• Procedures Performed: Detailed Descriptions of Audit Procedures
• Evidence obtained: Documentation supporting the audit conclusions
• Conclusions: The auditor's judgments and decisions

The working papers must be sufficient and appropriate to support the audit opinion and enable an experienced auditor to understand the work performed.

Purpose of Working Papers

Primary Purpose

Documentation of Audit Work

• Evidence of work performed: Shows that the audit has been performed according to standards
• Support for conclusions: Documents the basis for the audit opinion
• Quality assurance: Enables review and control of work

Communication and Coordination

• Teamwork: Coordinates work between audit staff
• Review: Enables efficient review of work
• Knowledge transfer: Preserves knowledge for future assignments

Secondary Purposes

Legal Protection

• Defense in lawsuits: Documents that the audit has been carried out properly
• Regulatory Compliance: Demonstrates adherence to laws and standards
• Insurance purpose: Supports claims for professional liability insurance

Efficiency and Continuity

• Planning future audits: Provides a basis for next year's audit
• Training: Used for training new employees
• Method development: Contributes to the improvement of audit processes

Requirements for Working Papers

Legal Requirements

Auditors Act

The Auditors Act requires auditors to: - Document the audit work: Adequate documentation of all material matters - Keep documents: Minimum 10 years after completion of the assignment - Ensure confidentiality: Protect client information

International Standards on Auditing (ISA)

ISA 230 "Audit Documentation" requires: - Sufficient documentation: Must support the audit opinion - Timely completion: Within 60 days of the date of the audit report - Traceability: Clear connection between work and conclusions

Quality requirements

Clarity and Comprehension

• Clear language: Easy to understand for experienced auditors
• Logical structure: Systematic structure of the documentation
• Completeness: All significant matters must be documented.

Traceability and References

• Cross-references: Clear references between documents
• Source references: References to underlying documents
• Conclusion track: Clear connection between evidence and conclusions

Structure and Organization

Main categories

Permanent Files

Contains information that is relevant over several years:

Category	Contents	Examples
Company info	Basic company data	Articles of association, organizational chart, ownership structure
Agreements	Long-term contracts	Lease agreements, loan agreements, insurance
Accounting procedures	Internal control systems	Accounting manuals, authorization matrices
Previous revisions	Historical information	Previous years' conclusions, matters highlighted

Running Files

Contains information specific to the current year's audit:

Category	Contents	Examples
Planning	Audit planning	Risk assessments, audit strategies
Execution	Audit procedures	Tests, analyses, confirmations
Review	Quality control	Review notes, follow-up
Termination	Conclusions	Summary, audit opinion

Organization of Working Papers

Numerical System

• Main sections: 100 series (planning), 200 series (execution)
• Subsections: 110 (risk assessment), 120 (audit plan)
• Individual papers: 110.1, 110.2, etc.

Alphabetical System

• Series A: Administrative conditions
• B-series: Balance sheet items
• R-series: Income statements
• S-Series: Summary and Conclusions

Contents of Working Papers

Planning documentation

Risk assessment

• Business Risk: Analysis of the client's industry and market
• Audit risk: Assessment of the risk of material misstatement
• Control risk: Evaluation of internal controls
• Detection risk: Planned level of substance testing

Audit plan

• Audit Strategies: Approach for Each Accounting Area
• Resource allocation: Time budget and personnel resources
• Timetable: Milestones and deadlines for the audit work
• Special areas: Planning for complex or risky areas

Execution documentation

Tests of Controls

• Control descriptions: Documentation of the client's controls
• Test procedures: Detailed descriptions of tests performed
• Test results: Findings and conclusions from control testing
• Nonconformities and follow-up: Identified weaknesses and corrective actions. Systematic nonconformity management ensures that all nonconformities are documented, analyzed and followed up in a structured manner.

Substance tests

• Sampling methods: Description of how the selection was made
• Test Procedures: Detailed descriptions of substance tests
• Test results: Findings, deviations and conclusions
• Extrapolation: Assessment of the significance of the findings for the population

Digital Working Papers

Benefits of Digitalization

Efficiency

• Automation: Automatic calculations and compilations
• Search functionality: Quick access to information
• Standardization: Consistent templates and procedures
• Integration: Connection to client systems

Quality

• Consistency: Standardized working methods
• Traceability: Automatic logging of changes
• Review: Electronic review tools
• Archiving: Secure and structured storage

Challenges and Solutions

Technical Challenges

• System Compatibility: Ensuring Systems Work Together
• Data Security: Protecting Sensitive Client Information
• Backup and recovery: Protect against data loss
• Updates: Keeping systems up to date

Organizational Challenges

• Training: Ensure that staff are proficient in the systems
• Standards: Develop consistent working methods
• Quality Control: Maintaining Quality in Digital Processes
• Change Management: Managing the Transition from Paper-Based Systems

Review and Quality Control

Review process

Levels of Review

1. Self-review: Auditor reviews own work
2. Peer review: Experienced colleague reviews the work
3. Partner review: Partner reviews critical areas
4. Quality Control Review: Independent Review of High-Risk Clients

Review focus

• Sufficiency: Is the documentation sufficient?
• Appropriateness: Does the documentation support the conclusions?
• Consistency: Is the work consistent with the audit plan?
• Standards: Are professional standards followed?

Quality indicators

Quantitative Measures

• Documentation level: Proportion of planned procedures that are documented
• Review time: Time spent reviewing working papers
• Nonconformance rate: Number of identified deficiencies or errors
• Completion time: Time from audit completion to completed documentation

Qualitative Assessments

• Clarity: Is the documentation clear and understandable?
• Relevance: Is the documentation relevant to the conclusions?
• Objectivity: Are the assessments objective and balanced?
• Professionalism: Does the documentation meet professional standards?

Storage and Archiving

Storage period

Legal Requirements

• Minimum 10 years: Requirements according to the Auditors Act
• Fiscal year + 10: Calculated from the end of the fiscal year
• Special circumstances: Longer retention in case of disputes or investigations
• Electronic archiving: Same requirements as for physical documents

Practical Considerations

• Accessibility: Ensure that documents can be retrieved when needed
• Readability: Maintain document readability over time
• Security: Protect against loss, damage, or unauthorized access
• Costs: Balancing storage costs against benefits

Archiving systems

Physical Archiving

• Organization: Systematic filing and labeling
• Storage: Safe and dry storage conditions
• Access Control: Restrict access to authorized personnel
• Disposal: Safe destruction after the storage period

Electronic Archiving

• File formats: Use of standardized and durable formats
• Metadata: Systematic recording of document properties
• Backup: Regular backup to separate locations
• Migration: Transfer to new systems when changing technology

Best Practices

For Auditors

During the audit work

• Document on an ongoing basis: Don't wait until the end to document
• Be specific: Describe exactly what was done and why
• Use standards: Follow established templates and procedures
• Cross-references: Ensure clear connection between documents

By Review

• Be critical: Question incomplete documentation
• Focus on risk: Prioritize review of high-risk areas
• Document review: Record review notes and follow-up
• Follow up: Ensure that identified deficiencies are corrected

For Companies Being Audited

Preparation for Audit

• Organize documents: Have documentation ready and accessible
• Describe processes: Document accounting and control processes
• Identify changes: Inform about significant changes since last year
• Available personnel: Ensure that key personnel are available

During the Audit

• Collaborate actively: Provide quick access to requested information
• Be open: Discuss challenges and concerns openly
• Follow up: Implement recommended improvements
• Learn: Use the audit as a learning opportunity

Challenges and Solutions

Common Challenges

Lack of time

• Problem: Not enough time for thorough documentation
• Solution: Plan documentation as part of the audit work
• Tools: Use standardized templates and automation
• Culture: Creating understanding of the importance of documentation

Complexity

• Problem: Difficult to document complex assessments
• Solution: Break down complex areas into smaller parts
• Structure: Use systematic approaches and frameworks
• Expertise: Involve specialists when needed

Technology

• Problem: Challenges with digital tools and systems
• Solution: Invest in training and technical support
• Standards: Establish clear guidelines for technology use
• Upgrade: Keep systems up to date and functional

Future Development Trends

Artificial Intelligence

• Automation: AI can automate routine tasks in documentation
• Analysis: Machine learning can identify patterns and anomalies
• Quality: AI can contribute to consistent documentation quality
• Challenges: Need for human assessment and control

Data analysis

• Large amounts of data: Possibility of analysis of complete data sets
• Visualization: Better presentation of analysis results
• Continuous audit: Possibility of ongoing monitoring
• Competence: Need for new skills among auditors

Conclusion

Audit working papers are the foundation for quality auditing and professional practice. They ensure that audit work is:

• Documented: Sufficient evidence for conclusions
• Traceable: Clear connection between work and statements
• Quality assured: Basis for review and control
• Responsible: Protection against legal and professional risks

Success factors for good working papers: - Systematic approach and consistent structure - Ongoing documentation during the audit work - Thorough review and quality control - Effective use of technology and digital tools - Continuous improvement of processes and methods

By following established standards and best practices, auditors can ensure that working papers fulfill their purpose as a basis for reliable audit opinions and contribute to confidence in financial reporting in Norwegian business.