Workpapers: IIA Standards | Fundamentals of Internal Auditing | Part 32 of 44

Summary

In this episode, Hernan Murdock and Kathleen Crawford explore the crucial role of work papers in internal auditing. They discuss key standards, including documentation, supervision, and quality assurance processes that ensure audit engagements are thorough and of high quality. Key topics include the importance of documenting sufficient, relevant, and reliable information, controlling access to audit records, and conducting both internal and external assessments to maintain auditing standards. The episode highlights how maintaining quality in work papers contributes to both auditor development and the credibility of the audit process.

Takeaways

• 😀 Work papers are a vital component of internal auditing, documenting the auditors' process, findings, and conclusions.
• 😀 The IIA standards guide the documentation of work papers, ensuring that the information is sufficient, reliable, relevant, and useful.
• 😀 Chief Audit Executives (CAEs) play a key role in controlling access to engagement records and ensuring their confidentiality.
• 😀 Work papers must be retained according to the organization’s policies and relevant regulations, with proper document destruction procedures in place.
• 😀 Proper supervision of internal audits is essential to ensure quality, achievement of objectives, and the development of staff.
• 😀 The level of supervision should be based on the experience and proficiency of auditors, with evidence of supervision documented.
• 😀 Work papers not only help with documentation but also serve as a tool for developing auditors through coaching notes and feedback.
• 😀 Internal audits are subject to both internal and external quality assurance assessments to verify the quality of the work.
• 😀 Internal quality assessments include ongoing monitoring and periodic self-assessments by knowledgeable individuals within the organization.
• 😀 External assessments are conducted every five years by an independent party to provide an unbiased evaluation of audit quality.
• 😀 The results of both internal and external assessments are communicated to senior management and the board, with corrective action taken if necessary.

Q & A

What is the primary purpose of work papers in the internal audit process?

Work papers serve as documentation that records what auditors do, what they find, and what they conclude during the audit process. They are crucial for supporting the auditor's conclusions and the engagement results.

What four attributes must information in work papers possess according to IIA Standard 2330?

Information in work papers must be sufficient, reliable, relevant, and useful. These attributes ensure that the documentation supports the auditors' findings and conclusions.

What is the role of the Chief Audit Executive (CAE) in controlling access to engagement records?

The CAE is responsible for managing access to engagement records, ensuring that sensitive information is controlled and shared only with senior management, legal counsel, or external parties on a need-to-know basis, following proper procedures.

What is the requirement for record retention in the internal audit process?

Internal audit records must be retained according to the organization’s guidelines and any relevant regulations, ensuring that documents are kept for an appropriate period. The retention plan is important for consistency and compliance.

What is the significance of proper supervision in an audit engagement?

Proper supervision ensures that the audit objectives are achieved, quality is maintained, and staff development occurs. The extent of supervision depends on the auditors' experience and proficiency, and supervision must be documented.

How does internal supervision in audits help ensure quality?

Internal supervision involves ongoing monitoring of audit performance, periodic self-assessments, and reviews of the audit process. This helps maintain quality and consistency, ensuring that work papers and audit activities align with established standards.

What are coaching notes, and how do they contribute to supervision?

Coaching notes are used to provide feedback on the work done by auditors. They serve as a tool for supervision, helping auditors improve their documentation and writing skills, contributing to their professional development.

What are the two aspects of the quality assurance and improvement program mentioned in the transcript?

The quality assurance and improvement program includes both internal and external assessments. Internal assessments involve ongoing monitoring and periodic reviews, while external assessments are conducted at least every five years by an independent party.

How does an external assessment contribute to the internal audit process?

An external assessment provides an unbiased review of the audit function, evaluating the quality of work and the audit processes. It helps identify areas for improvement, offers best practices, and ensures that the audit function conforms to professional standards.

What is the importance of the CAE’s report on the results of external assessments?

The CAE’s report communicates the outcomes of the external assessment to senior management and the board. It is crucial for addressing any non-conformance issues, ensuring corrective actions are taken, and confirming that the audit function aligns with professional standards.