INTRODUCTION
Objectives
 To determine the importance and functions of working papers in
IAing in Malta
 To analyse the manner of recording throughout the internal audit
process with reference to the following:
 Contents
 Filing
 Format of Working Paper Content
 Review process
 Ownership, Access and Retention
 To identify the electronic methods used in recording information
RESEARCH METHODOLOGY
A Qualitative approach was deemed to be the most
appropriate method
The Triangulation Technique has been applied
Semi-structured interviews were carried out with 13
local companies and the Big-4 Firms
Responses were transcribed and analysed using
spread sheet
Reason
Mean IA
Mean IAS
Mean Total
4.8
4.8
4.8
Facilitate 3rd party review and a means for audit quality control
4.5
4.5
4.5
Assist in planning and performing an audit
4.5
4.3
4.4
4.3
4.3
4.3
4.6
3.8
4.2
4.5
4
4.2
4.4
4
4.2
4
4
4
4.2
3
3.6
3.1
3.8
3.4
3
3
3
Provide evidence of the work performed and support the results and
conclusions reached
Compilation of working papers during rather than at the end of
audit
A record of significant matters for future audit reference
Demonstrate auditor’s decision-making process and factors
considered
Working Papers are pertinent to audit objectives and ensure that
they are being achieved
Evidence of compliance with professional standards
Prepared to increase the economy, efficiency and effectiveness of
the audit
Working papers provide information to other departments and other
users
Reflect changes in audit plan and procedures
8
7
6
5
No. of Respondents 4
Yes
No
3
Changes in the
amount of
documentation
kept by the
company
2
1
0
IA
IAS
9
8
7
Standard
Working Paper
6
No. of Respondents
5
Yes
4
No
3
2
1
0
IA
IAS
Authorisation &
Approval of
Working Papers
12
10
8
Yes
No. of Respondents 6
No
4
2
0
IA
IAS
Appropriateness
of Recording
Information
Time spent on
documentation
9 IA - spend an average of 48% of the audit on
documentation
4 IA – depends on the engagement
IAS Firms – spend an average of 29%
TheAuditPhase
that takes most
time to
document
7/17 – Execution Stage
PLANNING
STAGE
Documents
Prepared and
their
Contents
EXECUTION
STAGE
Documents
Prepared
and their
contents
PLANNING
STAGE
Preparers
Format of
Working
Papers
Content
10
EXECUTION
STAGE
9
8
7
6
No. of
5
Respondents
IAS
4
IA
3
Preparers
2
1
0
Senior Staff
Junior Staff
N/A - Single Person
Dept
12
10
No. of Respondents
8
IA
6
IAS
4
2
0
Narratives
Flowcharts
Questionnaires
Other Form
Type of
Working
Paper Content
Process
A closing meeting held with the
auditee to discuss draft report
3 IA – meeting with internal auditors
to discuss the audit
Signature of
the Report
Majority – signed by the Head of IAF
Content of
Report
Findings, Recommendations and
Management’s Action Plan
REPORTING
STAGE
8
7
6
5
No. of Respondents 4
Yes
3
No
2
Auditee
Satisfaction
Questionnaire
1
0
IA
REPORTING
STAGE
IAS
General feedback on the audit
Audit reporting
The performance/execution of auditors
Adherance to Professional Standards
Issues
targeted by
the
questionnaire
Communication with auditee
Disturbance caused by the auditor
Knowledge of auditor/Professional Due Care
Quality
Timing of audit
whether the audit added value to the auditee
All phases of the audit
0
1
2
3
Frequency
4
5
Common Approach
Take Recommendations from Final Report
and test whether these were implemented
IA
IAS
Firms
• Follow-up performed in
next audit & documented
in final report
• Discussed verbally and
documented in minutes
during BOD meetings
• Discussed in AC meeting
• Another full scope
audit –planning,
testing and reporting
FOLLOWUP STAGE
IA
9
8
REVIEW
PROCESS
7
6
No. of Respondents 5
4
3
2
1
0
Head of IA
Head +
Audit Manager Head of Audit
Supervisor of
Team
Audit
No Review
IAS
3
2
No. of Respondents
1
0
Head of IA
Senior Manager/Assistant
Director
Someone senior to the
preparer
Reviewers
of Working
Papers
7
REVIEW
PROCESS
6
5
No. of Respondents 4
IA
3
IAS
2
1
Electronic/
Manual
Review
0
Electronic Review
Manual Review
N/A
12
10
Preparation of
Review Notes
8
Yes
No. of Respondents 6
No
4
2
0
IA
IAS
FILING
14
12
10
No. of Respondents
8
No distinction
Distinction
6
4
2
0
IA
IAS
Distinction
between
Permanent
and Current
File
Access to working
papers is
controlled by all
respondents
Few requests for
working papers
Access
No access policy
specific to IAF
Head of IAF
controls and
grants access
To avoid work duplication & reduce
testing due to time constraints (7/16)
To obtain assurance and comfort that
controls are in place and working
properly (3/16)
Better planning of the external audit
(3/16)
To determine what the internal audit
engagement covers (2/16)
To identify areas that merit more audit
attention (2/16)
The external auditor gets the
assurance that the internal auditor is
performing the tasks the external
auditor has recommended (1/16)
LIAISING
WITH
EXTERNAL
AUDITORS
Reasons for
reliance on
internal
auditor’s
work
LIAISING
WITH
EXTERNAL
AUDITORS
8
7
6
No. of Respondents
5
4
3
2
1
0
All documents
Final Report
Final Report + Specific
Working Papers
Documents
provided to
External
Auditor
12
10
8
No. of Respondents
Yes
6
No
4
2
0
IA
IAS
Request for
External
Auditor’s
Working
Papers
RECORDS
RETENTION
8
7
6
5
No. of Respondents
Yes
4
No
3
2
1
0
IA
IAS
Retention Policy
within Internal
Audit
Department
ELECTRONIC WORKING PAPERS
Pro’s
Con’s
 Facilitate search for files and the
sharing of information between
the audit team
 Simultaneous access of the same
document by dif ferent user s
 Easier to filter data, to amend
and update working paper s
 Use of templates is more possible
 Better control of access through
passwords and varied degrees of
access
 Electroni c audit trail
 No physical storage space
 Printing is reduced
 Increased costs in maintenance
and back -ups
 Failure of I.T. system
 Staf f training
RECOMMENDATIONS
Standardised
Working Papers
Electronic Working
Papers
Sharing of
Working Papers
Education and
Training
•It ensures homogeneity, consistency among team members and more
structure to the physical paper
•Specific sector templates – effective at identifying issues during the
audit
•Comprehensive information is documented in a consistent manner
•Lead to streamlining, more standardisation and discipline
•Facilitates referencing of working papers
•Automates the process of providing raw data and inserted directly in
working papers
•Built in a way to assist the auditee to establish and document policies
and procedures
•Better support the auditee in dealing with identified deficiencies
•Informative sessions on documentation
•Guidance on what needs to be documented and how to use modern
techniques and methods to improve documentation