Learn something new every day
More Info... by email
In the world of finance, work papers are documents that are created during the process of evaluating the financial records of a business or individual. An accounting professional that is tasked with examining the bookkeeping of a business may utilize a pre-existing set of papers as part of the resources for going over the accounting records, or prepare the work papers as part of the auditing process. Many courts and tax agencies around the world recognize work papers as being authoritative and admissible as evidence at a court hearing or a tax audit.
The actual content of work papers will vary somewhat, depending on the nature of the business, the accounting standards used to conduct the audit, and any governmental regulations that must be observed while the audit is in progress. Some examples of items that are routinely included in work papers are transcriptions of discussions on various line items in the accounting records, memos, various types of schedules and assessments of the condition of the client’s balance sheet and income statements for the period under consideration. All the items included in the papers provide an organized source of information to support the opinion that is ultimately issued by the auditor.
Many accounting firms also utilize work papers as a means of analyzing the quality of the work performed by the auditor. The papers are examined for accuracy, arrangement of data, attention to details, and even the correctness of the conclusions reached by the auditor, using the information that is included in the work papers. This type of double check is helpful, in that the reviewer may have some questions regarding something in either the collection of documents or the final opinion of the auditor, and seek clarification before the opinion is actually released.
Properly arranged work papers can sometimes be used as evidence in a court of law. When this occurs, the auditor may be called upon to explain to the court the nature of the findings and how those finding affected the opinion that he or she rendered to the client. Auditors who work for tax agencies will also often create or utilize existing work papers as part of their investigation when conducting random audits on taxpayers. In most situations, the ultimate purpose of the papers is to provide factual data regarding transactions conducted by the business or individual, and make sure there are no irregularities in the accounting records maintained by the taxpayer.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!