Working papers are crucial documents in the audit process, aiding auditors in maintaining records of their procedures, findings, and conclusions. Let’s delve into the reasons behind each option:

Correct Answer: d) To provide a guide for advising another client on similar issues

This option doesn’t align with the primary purpose of working papers. Working papers are tailored to the specific audit engagement and are not meant to be comprehensive guides for advising other clients.

While they might contain valuable insights and lessons learned during the audit process, their primary focus is to document the audit work performed for the particular client under review.

They serve as an evidential basis for the audit findings and conclusions rather than a generalized advisory tool for other clients. Each audit engagement is unique, and while some information might be transferable, the working papers are not created explicitly to guide advice for other clients.

Other options and why they are correct:

a) To provide a basis for review of audit work:

Working papers serve as the foundation for reviewing audit work. These documents contain detailed records of the procedures undertaken, the evidence gathered, and the conclusions drawn during the audit. They are fundamental for supervisors, quality reviewers, or regulatory bodies to assess the thoroughness and accuracy of the audit process.

Reviewers can cross-reference the working papers with the audit objectives to ensure that the procedures were appropriately followed, the evidence obtained supports the conclusions, and the audit was conducted in compliance with professional standards.

b) To provide a basis for subsequent audits:

One of the key advantages of meticulously prepared working papers is their utility in future audits of the same client. They offer a historical perspective on the client’s operations, financial position, and previous audit findings.

This historical data helps auditors understand past audit strategies, the areas that required particular attention, and any issues identified in prior audits. Consequently, it assists in planning subsequent audits more effectively by highlighting areas prone to risks or changes and ensures continuity and consistency in the audit approach across different periods.

c) To ensure audit work is being carried out as per the program:

Working papers serve as a guide and a checkpoint during the audit engagement. They outline the audit program by documenting the planned procedures, tests, and objectives established at the beginning of the audit. Auditors refer to these documents to ensure that they are executing the audit in line with the predetermined program.

By cross-referencing the working papers with the audit program, auditors can verify if they have performed all necessary steps outlined in the plan. It acts as a tool for self-assessment, ensuring that no crucial steps are missed during the audit process and that all planned procedures are executed.

These advantages collectively emphasize the significance of working papers as a fundamental component of the audit process. They not only facilitate the current audit engagement but also contribute to the improvement of future audits, serve as a reference for regulatory compliance, and ensure adherence to planned audit procedures.

The meticulous preparation and maintenance of working papers contribute significantly to the reliability and credibility of the audit findings and conclusions.