ADVANTAGES OF AUDIT WORKING PAPERS (2024)

Advantages of Audit Working Papers

The important advantages of the working papers may be stated as below:

Support for auditor's opinion:

SAP-3 states, "Sufficient competentevidential matter is to be obtained through inspection, observation, inquiriesand confirmation to afford a reasonable basis for an opinion regarding thefinancial statements under examination." From this statement, it can be easilyconcluded that audit working papers provide the auditor sufficient backgroundfor giving his opinion about the financial state of affairs of the enterprise.

Helpful in the preparation and certification of audit report:

Working papers serve as the notes for the auditor for preparing his audit reportof the enterprise. Schedules analysis etc., prepared by the auditor in the courseof his audit work, serve as the basis and also certificate for this audit report.

Help in the performance of the audit work:

Working papers helpthe auditor in coordinating the work of the audit staff as well as directing themin the conduct of the audit. These papers help in the evaluation of the progressof the audit work also.

Work can be easily divided among the audit staff:

These papershelp in the division and distribution of work among the audit staff. Theseworking papers divide the work in the senior and junior staff and the seniorstaffmay easily monitor the work of the junior staff. These papers are verymuch useful where the audit work is being conducted at various branches, orat various offices of the enterprise.

Can be used as a permanent record:

Working papers serve as apermanent record as the audit procedures adopted and examination of variousbooks of accounts done are recorded in writing.This written record becomes a permanent record and can be used formany purposes by the auditor in the present as well as in future also.

Create a bridge between original transactions and financialstatements:

Working papers can be prepared by the auditor himself or by his staff also.The analysis of transactions provide animportant link between the original transactions and thefinancial statements. Thereason of this is that the work done by the auditor or his staffis in the nature oftracing the origin of the business transactions of the enterprise. This is based uponthe books of the original entries. Further, rectification and adjustment entries arealso based upon these papers, as the errors located are to be rectified through thejournal entries.

Act as a basis for review and revision of internal control system:

Questionnaires relating to Internal Control System adopted by the enterprise arepart and parcel of working papers. Where the auditor finds weaknesses in theinternal control system of the enterprise, he suggests his client for a review andrevision of it. Thus, these papers help in the depth review of the internal controlsystem.

Help in evaluation and training of audit staff:

Working papers serveas a means of examination of the audit staff. These papers help the auditor to knowwhether the work done by the audit staff is upto the prescribed standard. Thesepapers reflect the auditor's capability and capacity to audit, since at every step hehas to take proper decisions regarding the audit work to be done by his staff.

Good evidence for the work done:

Working papers serve as evidenceof the nature and extent of work being done by the auditor and his staff. Theaudit tests done, procedures followed by him and conclusions arrived by himare all recorded and form part of these working papers. These serve as a goodevidence for the auditor. In case he is charged for negligence, he can use thesepapers as a defence for himself.

Can be a suitable basis for further work:

The auditor and his stafftakes notes and makes out analysis of the work done by him or his audit staff.These notes are of great importance for further work and may be used by theauditor in several other areas of the enterprise.

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