AU Section 339A
- (.02 - .04) Functions and Nature of Working Papers
- (.05) Content of Working Papers
- (.06 - .08) Ownership and Custody of Working Papers
- (.09) Effective Date
(Supersedes Statement on Auditing Standards No. 1, section 338, "Working Papers.") fn 1
Source: SAS No. 41.
See section 9339A for interpretations of this section.
Issue date, unless otherwise indicated: April 1, 1982.
The auditor should prepare and maintain working papers, the form and content of which should be designed to meet the circumstances of a particular engagement. fn 2 The information contained in working papers constitutes the principal record of the work that the auditor has done and the conclusions that he has reached concerning significant matters. fn 3
Functions and Nature of Working Papers
Working papers serve mainly to—
- Provide the principal support for the auditor's report, including his representation regarding observance of the standards of field work, which is implicit in the reference in his report to generally accepted auditing standards.
- Aid the auditor in the conduct and supervision of the audit.
Working papers are records kept by the auditor of the procedures applied, the tests performed, the information obtained, and the pertinent conclusions reached in the engagement. Examples of working papers are audit programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries prepared or obtained by the auditor. Working papers also may be in the form of data stored on tapes, films, or other media.
Factors affecting the auditor's judgment about the quantity, type, and content of the working papers for a particular engagement include (a) the nature of the engagement, (b) the nature of the auditor's report, (c) the nature of the financial statements, schedules, or other information on which the auditor is reporting, (d) the nature and condition of the client's records, (e) the assessed level of control risk, and (f) the needs in the particular circumstances for supervision and review of the work.
Content of Working Papers
The quantity, type, and content of working papers vary with the circumstances (see paragraph .04), but they should be sufficient to show that the accounting records agree or reconcile with the financial statements or other information reported on and that the applicable standards of field work have been observed. Working papers ordinarily should include documentation showing that—
- The work has been adequately planned and supervised, indicating observance of the first standard of field work.
- A sufficient understanding of internal control has been obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed.
- The audit evidence obtained, the auditing procedures applied, and the testing performed have provided sufficient competent evidential matter to afford a reasonable basis for an opinion, indicating observance of the third standard of field work.
Ownership and Custody of Working Papers
Working papers are the property of the auditor, and some states have statutes that designate the auditor as the owner of the working papers. The auditor's rights of ownership, however, are subject to ethical limitations relating to the confidential relationship with clients.
Certain of the auditor's working papers may sometimes serve as a useful reference source for his client, but the working papers should not be regarded as a part of, or a substitute for, the client's accounting records.
The auditor should adopt reasonable procedures for safe custody of his working papers and should retain them for a period sufficient to meet the needs of his practice and to satisfy any pertinent legal requirements of records retention.
This section is effective for engagements beginning after May 31, 1982.
Footnotes (AU Section 339A — Working Papers):
fn 1 This section amends section 230, Due Professional Care in the Performance of Work, paragraph .04, by deleting the second sentence of that paragraph.
fn 2 This section does not modify the guidance in other Statements on Auditing Standards, including the following:
- The letter of audit inquiry to the client's lawyer required by section 337, Inquiry of a Client's Lawyer Concerning Litigation, Claims, and Assessments, paragraphs .08 and .09, or the documentation required by paragraph .10 when a response to the audit inquiry letter is received in a conference
- The written representations from management required by section 333, Management Representations
- The notation in the working papers required by section 325, Communication of Internal Control Related Matters Noted in an Audit, paragraph .09, if conditions relating to internal control observed during an audit of financial statements are communicated orally to the audit committee or others with equivalent authority and responsibility
- The written audit program or set of written audit programs required by section 311, Planning and Supervision, paragraph .05
- The representation letter from a successor auditor required by section 711, Filings Under Federal Securities Statutes, paragraph .11b, when an auditor has audited the financial statements for prior periods but has not audited the financial statements for the most recent audited period included in a registration statement
- The understanding of internal control components obtained to plan the audit, and the basis for conclusions about the assessed level of control risk required by section 319, Consideration of Internal Control in a Financial Statement Audit, paragraphs .61 and .83.
- The notation in the working papers required by section 317, Illegal Acts by Clients, if illegal acts are communicated orally to the audit committee or others with equivalent authority and responsibility
- The notation in the working papers required by section 380, Communication With Audit Committees (if applicable), paragraph .03, if matters regarding the scope and results of the audit are communicated orally to the committee
- The notation in the working papers required by section 316, Consideration of Fraud in a Financial Statement Audit, paragraph .37, of the performance of the assessment of the risk of material misstatement due to fraud and the auditor's response to the risk factors identified.
[Footnote revised, May 2001, to reflect conforming changes necessary due to the issuance of Statement on Auditing Standards No. 94.]
fn 3 However, there is no intention to imply that the auditor would be precluded from supporting his report by other means in addition to working papers.