Question Tag: Working Paper Files

At one of the seminars you attended on legal and regulatory frameworks of financial reporting, it was stated that one of the duties of the Financial Reporting Council of Nigeria (FRC) is to provide legal and regulatory frameworks for minimum practice guidelines for auditors in Nigeria. To do this, the FRC ensures that all activities of Registered Auditors, other Assurance Providers, and Audit Committee members are regulated to sustain best ethical practices and promote quality audit services.

It is part of the obligations of the Financial Reporting Council of Nigeria to conduct practice reviews of registered professionals. You learned that, for effective monitoring, the Audit Regulation mandates external auditors to create an audit file for each statutory audit carried out and to retain the working papers and other materials supporting the audit report conclusions for a minimum of seven years.

A classmate from university, now a banker, attended the seminar with you and has asked for further clarification on what is meant by “working paper” and why regulators are concerned with audit file reviews.

Required:

a. Identify the different types of audit working paper files. (5 Marks)

b. Outline the importance of audit working paper files. (5 Marks)

c. Explain briefly the conditions that determine the size of audit working papers. (5 Marks)