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RUCTIONS This practice aid is intended to help auditors document the results of testing while meeting the requirements of AU-C section 230, Audit Documentation . This publication is an other auditing publication as defined in AU-C section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards A!C"A, "rofessional #tandards$. %ther auditing publications ha&e no authoritati&e status' howe&er, the( ma( help (ou, as an auditor, understand and appl( certain auditing standards.
!n appl(ing the auditing guidance included in an other auditing publication, the auditor should, e)ercising professional *udgment, assess the rele&ance and appropriateness of such guidance to the circumstances of the audit. The auditing guidance in this document has been re&iewed b( the A!C"A Audit and Attest #tandards staff and published b( the A!C"A and is presumed to be appropriate. This document has not been appro&ed, disappro&ed, or otherwise acted on b( an( senior technical committee of the A!C"A.
Client Name Working Paper Title Balance Sheet Date Prepared B Client!
Working Paper # Preparer Date Completed Re"ieer Date Re"ieed
O$%ecti"e If not addressed else!here in the audit file (e"g" in the audit program# describe the nature of the procedures to be performed and the assertion(s being tested" Re&'lt& o( Proced're& and )"idence O$tained In this section# document the results of the audit procedures performed" $he form and content of the documentation !ill depend on the nature of the procedures performed% ho!ever# the documentation must be sufficient to enable an e&perienced auditor# having no previous connection to the audit# to understand the e&tent of the auditing procedures performed# the results of those procedures# and the audit evidence obtained" Documentation should ' Include the identifying characteristics of the specific items tested% ' Demonstrate that accounting records agree or reconcile !ith the audited financial statements or other audited information% and ' Include any significant findings or issues# as !ell as actions taen to address them (including any additional evidence obtained" $icmars can save the auditor time and space by e&plaining procedures performed in one centrali)ed location" Commonly used ticmars appear in the *$icmar +egend* belo!"
Tickmark Legend
* +ooted C* Crossfooted + Calculation checed and agreed P, Agreed to prior-(ears woring papers TB Agreed to trial balance -. Agreed to general ledger R Agreed to report C Agreed to confirmation T Traced to (describe source
Ⓐ Ⓑ Ⓒ Ⓓ ,se to e&plain procedures and findings ① ② ③ ④ ,se to cross'reference items !ithin the !oring paper ,se to indicate a test !as performed and no e&ceptions !ere noted
Concl'&ion If significant findings or issues !ere noted# document the conclusions reached thereon# and significant professional judgments made in reaching those conclusions
Client Name Working Paper Title Balance Sheet Date Prepared B Client!
)ample Compan( "lanning Anal(tics - #ales and C1# 2320)4 7o
Working Paper # Preparer Date Completed Re"ieer Date Re"ieed
/- AC 3520)6 8+ 3320)6
O$%ecti"e To anal(=e changes in account balances and other related metrics in order to identif( areas that ma( represent specific riss rele&ant to the audit. Re&'lt& o( Proced're& and )"idence O$tained Expectations ① )ample
Compan( is the worlds premier pro&ider of widgets. >idget demand has been strong this (ear, with 0; growth in the industr( during 20)4. >e e)pect to see a 0 - 5; increase in sales, with a similar increase in accounts recei&able. ② "er inquir( of ?oe #mith, C%%, increased demand has led )ample Compan( to e)pand their capacit(, purchasing a new production facilit( for @2 and financing the full amount with a long-term note pa(able. ecause the note was issued in 8ecember 20)4, an( increase in interest e)pense is e )pected to minimal. ③ The C%% also indicated that )ample Compan( has adopted a new in&entor( management approach which has impro&ed their in&entor( turno&er b( 0;.
Trend Analysis
#ales Cost of goods sold 1ross margin 1ross margin as a ; of sales #elling e)penses !nterest e)pense
Days Sales in Receivables
C'rrent ear 2,500,000 *S ,6<0,000 *S 620,000 *S 2<.<0; 230,000 *S 93,000 *S
Prior ear / Change 0 Change 2,65,000 P, 325,000 9.:9; ,544,000 P, 29,000 3.46; 40:,000 P, 2<.00; <9,000 P, 94,000 25.00; 92,000 P, ,000 2.3<;
C'rrent ear
Prior ear
Balance Sheet Ratio Analysis
Current (ear 4 da(s "rior (ear 9 da(s 9.<; + ; increase + + Inventory turnover + Current (ear .<9 times + "rior (ear .46 times + ; increase 0.<;
Accounts recei&able, net !n&entor( 7otes pa(able
,00,000 *S ,000,000 *S 936,000 *S
<93,000 P, <32,000 P, 936,000 P,
Tickmark Legend
+ Calculation checed and agreed *S Agreed to financial statements P, Agreed to prior-(ears woring papers ① !ncrease in sales and da(s sales in recei&ables of 5; and 9;, respecti&el(, is consistent with e)pectations. ②
#light increase in interest e)pense is consistent with e)pectations. owe&er, the lac of an( change in notes pa(able indicates the @2 note which )ample Compan( entered into in 8ecember ma( not be properl( recorded. This warrants further e)ploration on in the notes pa(able section of the audit file at woring paper BBB.
③ Change in in&entor( turno&er is consistent with e)pectations.
Concl'&ion Changes in re&enue, cost of goods sold, and related accounts were consistent with e)pectations with the e)ception of notes pa(able, which showed no change despite a new @2 note signed in 8ecember. Additional consideration appears on woring paper BBB.
+ + +
+ + +
Client Name Working Paper Title Balance Sheet Date Prepared B Client!
)ample Compan( 2 #hort-Term 7otes Decei&able 2320)4 7o
/-2 1! 2<20)6 ?EF 22520)6
Working Paper # Preparer Date Completed Re"ieer Date Re"ieed
O$%ecti"e To &erif( that the notes recei&able appearing on the balance sheet e)ist, )ample Compan( 2 has rights to them, and their &aluation is appropriate. Re&'lt& o( Proced're& and )"idence O$tained
C'&tomer& Name Customer A Customer Customer C Customer 8 Customer Customer + Customer 1
Intere&t Rate I&&'e Date 6; 620)4 :; :520)4 0; :20)4 <; 62920)4 :; <220)4 ; 03020)4 <; 2520)4
at'rit Date 2:20)6 33020)6 520)6 3<20)6 20)6 92:20)6 43020)6
*ace 3mo'nt 2,000.00 330,000.00 62,000.00 :,000.00 59,000.00 :5,000.00 2:,000.00 :63,000.00 *4 TB
T4 C T4 C T4 C T4 C T4 C T4 C T4 C
3ccr'ed Intere&t 1256152789 :95.00 <,606.00 2,3<6.00 3,:.00 ,65<.00 ,665.00 64<.00 :,53.00 *4 TB
Tickmark Legend
T Traced face amount, interest rate, issue and maturit( dates to note recei&able documents C Agreed to confirmation + Calculation checed and agreed * +ooted TB Agreed to trial balance Concl'&ion
+ + + + + + +
Gerified e)istence and rights b( e)amining notes recei&able document. ased on 00; confirmation and inquir( of controller who confirmed collectibilit( of all accounts$, &aluation appears appropriate and no loss pro&ision appears necessar(.
