 Objectives  To determine the importance and functions of working papers in IAing in Malta  To analyse the manner of recording throughout the internal audit process with reference to the following:  Contents  Filing  Format of Working Paper Content  Review process  Ownership, Access and Retention  To identify the electronic methods used in recording information INTRODUCTION

RESEARCH METHODOLOGY A Qualitative approach was deemed to be the most appropriate method Semi-structured interviews were carried out with 13 local companies and the Big-4 Firms The Triangulation Technique has been applied Responses were transcribed and analysed using spread sheet

Changes in the amount of documentation kept by the company Standard Working Paper

Authorisation & Approval of Working Papers Appropriateness of Recording Information

Time spent on documentation 9 IA - spend an average of 48% of the audit on documentation 4 IA – depends on the engagement IAS Firms – spend an average of 29% 9 IA - spend an average of 48% of the audit on documentation 4 IA – depends on the engagement IAS Firms – spend an average of 29% TheAuditPhase that takes most time to document 7/17 – Execution Stage

Documents Prepared and their Contents PLANNING STAGE

Documents Prepared and their contents EXECUTION STAGE

Preparers Format of Working Papers Content PLANNING STAGE

Preparers Type of Working Paper Content EXECUTION STAGE

REPORTING STAGE ProcessProcess A closing meeting held with the auditee to discuss draft report 3 IA – meeting with internal auditors to discuss the audit Signature of the Report Majority – signed by the Head of IAF Content of Report Findings, Recommendations and Management’s Action Plan

Auditee Satisfaction Questionnaire Issues targeted by the questionnaire REPORTING STAGE

FOLLOW- UP STAGE Take Recommendations from Final Report and test whether these were implemented Common Approach IA IA Follow-up performed in next audit & documented in final report Follow-up performed in next audit & documented in final report Discussed verbally and documented in minutes during BOD meetings Discussed verbally and documented in minutes during BOD meetings Discussed in AC meeting Discussed in AC meeting Follow-up performed in next audit & documented in final report Follow-up performed in next audit & documented in final report Discussed verbally and documented in minutes during BOD meetings Discussed verbally and documented in minutes during BOD meetings Discussed in AC meeting Discussed in AC meeting IAS Firms Another full scope audit –planning, testing and reporting Another full scope audit –planning, testing and reporting

Reviewers of Working Papers REVIEW PROCESS

Electronic/ Manual Review Preparation of Review Notes REVIEW PROCESS

Distinction between Permanent and Current File FILING

Access to working papers is controlled by all respondents Few requests for working papers No access policy specific to IAF Head of IAF controls and grants access Access

LIAISING WITH EXTERNAL AUDITORS  To avoid work duplication & reduce testing due to time constraints (7/16)  To obtain assurance and comfort that controls are in place and working properly (3/16)  Better planning of the external audit (3/16)  To determine what the internal audit engagement covers (2/16)  To identify areas that merit more audit attention (2/16)  The external auditor gets the assurance that the internal auditor is performing the tasks the external auditor has recommended (1/16) Reasons for reliance on internal auditor’s work

Documents provided to External Auditor Request for External Auditor’s Working Papers LIAISING WITH EXTERNAL AUDITORS

RECORDS RETENTION Retention Policy within Internal Audit Department

Pro’s  Facilitate search for files and the sharing of information between the audit team  Simultaneous access of the same document by different users  Easier to filter data, to amend and update working papers  Use of templates is more possible  Better control of access through passwords and varied degrees of access  Electronic audit trail  No physical storage space  Printing is reduced Con’s  Increased costs in maintenance and back-ups  Failure of I.T. system  Staff training ELECTRONIC WORKING PAPERS

RECOMMENDATIONS It ensures homogeneity, consistency among team members and more structure to the physical paper Specific sector templates – effective at identifying issues during the audit Comprehensive information is documented in a consistent manner Standardised Working Papers Lead to streamlining, more standardisation and discipline Facilitates referencing of working papers Automates the process of providing raw data and inserted directly in working papers Electronic Working Papers Built in a way to assist the auditee to establish and document policies and procedures Better support the auditee in dealing with identified deficiencies Sharing of Working Papers Informative sessions on documentation Guidance on what needs to be documented and how to use modern techniques and methods to improve documentation Education and Training