Updated: Nov 6, 2020
Why we need to ensure we reference our audit files and workpapers well
It might seem like such a basic concept, but too often do we see audit teams and auditor forego referencing their audit files and their workpapers. It only takes a few minutes to do, but can save a world of problems later on.
What is referencing?
Referencing is a bit like indexing. Each audit file will be given a unique ID or number. For instance, an audit in 2020 for Business Continuity may be given the reference 2020-01. This shows it the first audit on the plan for 2020.
For workpapers, each workpaper will be given an individual number. For those who have looked at our templates, you will notice that our workpaper referencing are a combination. For example: B1.0010. This broken down mean, Part B of the file (in our case, planning), section 1 (meaning background research) and .0010 (representing paper number 1 for this section).
Everyone has their own way of referencing. Whatever way you choose, its important to make sure it is consistent. Again, for those who have looked at our workpapers, you will notice that our workpaper references are linked back to the audit checklists.
How do you reference
Again, everyone has their own style. For audit files, my personal preference is to make sure the audit file (whether on the computer or a physical file), has the reference included at the start of the folder. For instance, your folder on your computer will be labelled: "2020-01 - Business Continuity".
For testing workpapers, my personal preference is for all referencing to be included in BOLD RED FONT in the top right hand corner. Why the top right corner? Because if papers are printed and stapeled together, its easy to flick through the pages and easily spot the reference as you go. Remember, for us, we have labelled our planning section a B, so we can flick through our file quickly to find the planning section we need.
Whats the benefit?
For audit files, referencing the audit can pay dividends for all parts of audit. For example, referencing audits can make managing the action tracking much more simpler. Additionally, the Audit Universe can be updated to reference audits that have been completed. This will make it easier in future years when auditors want to look back at previously completed audits.
For audit workpapers, referencing allows us to easily cross reference the audit program to where the work has been completed. Additionally, we can cross reference between workpapers or to where evidence exists. Lastly, we can reference findings back to the workpaper where they were found. For those who have read my other blog posts, you will hear me call this the 'Golden Thread'. This thread is the magic line which links our planning to the scope to the work program to the workpapers and eventually to the final report. This Golden Thread is achieved through good referencing.
Referencing is such a simple task and something that should be embedded into our way of working. If done well, and done from the start of the audit, you won't notice it taking up any extra time, but you will notice the benefits; particularly when the external auditor questions you about a report and you can easily direct them to the supporting workpapers in less than a minute.
Here's to good workpaper referencing.