The requirement is to identify the least likely item to be included in the permanent file of an auditor's working papers. Answer (c) is correct because permanent files include information affecting a number of years' audits, and the working trial balance relates most directly to the current and, to a limited extent, the subsequent year's audit. Answers (a), (b), and (d) are all incorrect because bond indenture agreements, lease agreements, and a flowchart of internal control affect more years' audits than does a specific year's working trial balance. Show
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. 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. Functions and Nature of Working Papers.02Working papers serve mainly to—
.03Working 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. .04Factors 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.05The 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—
Ownership and Custody of Working Papers.06Working 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. .07Certain 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. .08The 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. Effective Date.09This section is effective for engagements beginning after May 31, 1982. Footnotes (AU Section 339A — Working Papers): This section amends section 230, Due Professional Care in the Performance of Work, paragraph .04, by deleting the second sentence of that paragraph. This section does not modify the guidance in other Statements on Auditing Standards, including the following:
[Footnote revised, May 2001, to reflect conforming changes necessary due to the issuance of Statement on Auditing Standards No. 94.] 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. What are content of the permanent file of audit working papers?We can divide the working papers into two parts
It includes information like financial statements and audit report of the entity, trial balance and worksheets, records regarding internal control risk of an entity, external confirmations received, queries of auditor and reply received from the management etc.
What permanent file contains in auditing?Permanent files typically contain information that can be useful to the auditor for several assignments at the audit entity, whereas current files usually contain the supporting documentation for a specific audit.
Which of the following most likely be included in the permanent file of an auditor's working papers?The permanent (continuing) file of an auditor's workpapers most likely would include copies of the: debt agreements. An auditor should design the written audit plan so that: the audit procedures selected will achieve specific audit objectives.
What is permanent working paper?"Permanent working paper" is one of the names that one could use for this. The point is that they are "working papers" in the sense that someone is "working with the data shown therein", and they are "permanent" in the sense that this is not work in progress.
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