- It provides guidance to the audit staff with regard to the manner of checking the schedules.
- The auditor is able to fix responsibility on the staff member who signs each schedule checked by him.
- It acts as an evidence in the court of law when a charge of negligence is brought against the auditor.
- It acts as the process of planning for the auditor so that he can estimate the time that may be required for checking the schedules.
The auditor should adopt reasonable procedures for custody and confidentiality of his working papers and should retain them for a period of time sufficient to meet the needs of his practice and satisfy any pertinent legal or professional requirements of record retention. Clarification On The Auditors’ Rights Where Clients And Other Auditors Seek Access To Their Audit Working Papers
1. Auditing and Assurance Standard (AAS) 1, “Basic Principles Governing an Audit”, states in para 6: “The auditor should respect the confidentiality of information acquired in the course of his work and should not disclose any such information to a third party without specific authority or unless there is a legal or professional duty to disclose”. Auditing and Assurance Standard (AAS) 3, “Documentation” (Paragraph 13), states: “Working papers are the property of the auditor. The auditor may, at his discretion, make portions of or extracts from his working papers available to his client. “AAS 3 further requires (paragraph 14), inter alia, that the “auditor should adopt reasonable procedures for custody and confidentiality of his working papers.”
2. Part I of the Second Schedule to the Chartered Accountants Act, 1949, provides that “A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct, if he discloses information acquired in the course of his professional engagement to any person other than his client, without the consent of his client or otherwise than as required by any law for the time being in force.”
3. Requests are sometime received by the members of the Institute, who have/had been performing the duties as the auditors of an enterprise, to provide access to their audit working papers. The requests may be made by the clients or other auditors of the enterprise or its related enterprise such as a parent enterprise.
4. It is hereby clarified that except to the extent stated in para 5 below, an auditor is not required to provide the client or the other auditors of the same enterprise or its related enterprise such as a parent or a subsidiary, access to his audit working papers. The main auditors of an enterprise do not have right of access to the audit working papers of the branch auditors. In the case of a company, the statutory auditor has to consider the report of the branch auditor and has a right to seek clarifications and/or to visit the branch if he deems it necessary to do so for the performance
of the duties as auditor. An auditor can rely on the work of another auditor, without having any right of access to the audit working papers of the other auditor. For this purpose, the term ‘auditor’ includes ‘internal auditor’.
5. As stated in para 4, the client does not have a right to access the working papers of the auditor. However, the auditor may, at his discretion, in cases considered appropriate by him, make portions of or extracts from his working papers available to the client.