| Written by Judith DeVilliers,
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What are electronic working papers?
1. Specialized software you purchase for managing the audit process or for gathering audit evidence. Not the subject of this discussion.
2. All of the stuff on your computer you generate or collect as audit evidence, which may include the above, is the subject of this discussion.
Why electronic audit working papers?
Five years ago a six-month performance audit would result in a stack of paper
three feet high (file cabinets were in great demand for prolific auditors). Today storage of such an audit may consist of a small administrative file and one or two CDs.
Using electronic working papers is a natural progression for our profession as auditors in today’s technical world. Our personal computers and LANs are already full of working papers resulting from audit evidence we have collected in electronic format. The results of our work include hundreds of files consisting of interview notes, documents for best practices or comparative information, raw data and analysis in database files or specialty software used for statistical analysis, spreadsheets used for gathering and summarizing data and analysis, scanned documents, emails, downloaded documents from intranet
or internet sources, electronic copies of reports, procedures, manuals, and working papers with analysis and summaries of all of the above.
As auditors we have two options of handling the vast amount of electronic evidence we collect in an audit. (1) We can keep those printers busy and fill up notebooks and file cabinets with the audit evidence, or (2) we can maintain and manage this vast amount of electronic audit evidence in electronic format.
How to manage electronic working papers:
Managing electronic working papers can vary on a continuum from: the lowest — printing all documents, to printing only summary or major working papers and documents, to the high end — no printing at all except perhaps a copy of the final audit report. A large number of audits in our office fall on the high end – total electronic. So how do we manage these electronic working papers?
Managing electronic working papers
Links are the key for managing electronic working papers. If you are using Microsoft Office products you have the linking capacity not only among those products but to other software files such as pdf files, scanned documents, charting software, statistical software packages and reports, etc.
Links serve two primary purposes (1) organizational flexibility, and (2) referencing and reviewing.
Organizational flexibility:
Using links to organize your working papers makes sense even if you do not chose to “go electronic” for your working papers. Links allow the audit team to organize files on the computer in a variety of ways by creating indexes. For example if you had interview notes in a variety of folders by subject matter; you could create an index document listing all interviews with links to the documents regardless of where in the computer the file actually resides. Links are especially useful for teams since often individual auditors have different ways of organizing the same information; each can have indexes that make sense to them without moving or copying files. You can link your audit fieldwork plan to summaries of work done; and link finding summaries to actual evidence documents.
Referencing and reviewing:
Links are the electronic way of indexing work to audit evidence needed to support findings in an audit report quite similar to how you do it with hard copy (paper) working papers. The draft report has links (similar to the working paper references on a paper copy) directly to the evidence to support the information or finding in the report. Rather than searching through a stack of notebooks full of paper, the reviewer simply clicks on the link and goes directly to the referenced working paper.
How to create links
Microsoft products:
Creating links is easy; it begins with “insert hyperlink” from your “Insert” menu selection for Word, Excel, Access, or PowerPoint; Ctrl K also works for these software packages. The insert hyperlink function gives you a menu which allows you to link to a reference within that same document or allows you to select any file on your computer. For Word documents you may wish to create “bookmarks” as reference to specific places within that document. For Excel if you want to link directly to a tab or section of a worksheet you need to type in the address using the following format: file name.xls#tab!A1.
You also have the opportunity of choosing the text to go into the linking document which will appear in blue with underline (indicates this is a link). Personally I prefer to include the file name in this text, just in case the file gets moved or the link somehow broken, then the link can be easily reestablished or the reader can find the file by name.
Microsoft has several other ways of creating hyperlinks such as copying the area you wish to link to (such as a heading); then pasting that into the document you are linking from by going to the “Edit” menu and selecting “Paste as Hyperlink”.
Other links:
As mentioned earlier, you can link to files other than Microsoft products. You go to the “insert hyperlink” option to select the file. These can be photographs, sound clips (if you collect that as evidence), internet pages (good for short periods, when you are in the process, but these move so aren’t good for permanent archiving), or even to entire folder rather than a specific file.
Getting Started
If any or all of the above sounds like something you would like to try, here are some steps to get started. It takes time to learn how to manage full blown electronic workpapers, so go slowly. In our office some of us go total electronic, some none, and some use a mixture. Even if you have a need to see printed pages, you can still do so as needed and maintain the electronic working papers as the final product.
Step1: Use internal links within a long document or complex spreadsheets. These internal links can be short indexes which help you or another person move quickly to specific areas in the document.
Step 2: Begin linking your audit fieldwork plan to files or create indexes which link to computer folders or files. Even if you don’t choose to do electronic working papers; using links improves management of your computer files during the audit process, especially for audit teams sharing information and data.
Step 3: Link from one document to another. For example you have an interview which has comments about a certain policy or procedure and you have the procedures manual as an Adobe Acrobat file. You can insert a hyperlink to the pdf file.
Step 4: Link summary working papers or findings discussions directly to the documents you consider supporting evidence for the finding or discussion. This step is the preliminary one to actually indexing the audit report.
Step 5: The final stage is to actually index the report to the audit evidence. Again this makes sense as so very much of the evidence auditors collect in today’s environment is already in electronic format. The review process is facilitated since reviewers only have to click on the link to go directly to the supporting working paper.
In our office we believe we are not only more efficient in use of our time by using electronic working papers; but also save in the cost of paper and storage for the old way of paper documentation of our audit evidence.
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