audit note book and working papers

AUDIT NOTE BOOK & WORKING PAPERS

George Jose

Audit Notebook

Sort of diary maintained by auditing staff for recording their difficulties and experiences.

Takes note of all irregularities identified in course of audit, unsatisfactory arrangements, weaker financial administration.

Includes recording of:

A. General information &

B. Specific points.

Contents of Audit Note Book

• List of books of accounts• Nature of business• Name of the officers• System of accounting and internal control• Technical terms• Major provisions of AOA & MOA affecting

audit• Financial and administrative structure

Contd...

• Accounting policies followed by the company• Queries in course of audit & their disposal• List of missing vouchers• Mistakes and errors• Matters to be discussed with the auditor• Dates of commencement, closure, total

balances• Points to be included in audit report.

Usefulness

• Records important matters• Facilitate preparation of audit report• Assist auditor to assess the efficiency• Serves as a reliable documentary evidence in

support of audit work• Provides guidance to the audit staff• Helps in framing of future audit programmes.

Audit Working Papers

• Constitute the link between the auditor’s report and client’s record.

• Documentation as per AAS-1 and AAS-3.

• A combination of AOA, MOA/ P. D./ T. D. Plus contents of minute books, balance sheet, P&L a/c, Letter of engagement.

Ownership & Custody

• Property of the auditor

• Entitled to retained by himself

• Case of Chantery Martin & Co. v/s Martin

• Confidentiality

Features

• Standard Form & Layout• Space for Margins• Proper Organisation & Arrangement• Completeness, Accuracy & Clarity• Good Quality Papers.

Importance

• Vital instrument in the successful completion of all audit work

• Guidance so as to the manner of checking schedules

• Fixing of responsibilities• Act as an evidence in the court• Act as the process of planning

Types of Files

• Permanent File: usually contains documents and matters of importance of clients’ businesses which will be required for more than one audit.

• Examples: Statutory documents including name & address, legal documents, internal controls, organisational structure.

• Current File: contains documents that are required for the current audit period regarding the client’s business.

• Examples: Copies of P&L a/c, trading a/c, balance sheet, BRS, Inventory valuation, etc.