The working papers of Maltese internal auditors : an analysis

Abstract

PURPOSE: The aim of the study was to determine the importance of IAing documentation; to analyse the recording of the audit process with respect to contents, filing, format of working paper content, review process, ownership, access, retention as well as sharing of working papers with external auditors. The study also sought to identify the electronic methods used in recording information. DESIGN: In order to evaluate the working papers of Maltese internal auditors, a qualitative research method has been applied. Personal, semi-structured interviews were carried out with seventeen respondents. This sample was split into two groups; thirteen internal auditors from Maltese companies that have an in-house internal audit function (IA) and four internal auditors from the Big-4 firms that provide internal auditing services (IAS). FINDINGS: From this study it emerges that the most important reason for which working papers are prepared is to provide evidence of the work performed and support the results and conclusions reached. Standardised working papers are only used by few IA, contrasting with the IAS firms, which have a high degree of standardisation in their working papers. Different companies compile different working papers at the planning and execution stages, implying that a common approach is not adopted. However, at the execution stage, the IAS firms prepare the same documentation. Planning working papers are compiled by senior staff together with the Head of internal auditing, whilst the execution working papers involve delegation to junior staff. The review of working papers is performed mainly by the Head of internal auditing. The most popular format of working paper content is in the form of narratives both for the planning and execution stages. All respondents make use of electronic working papers. However, the use of specialised audit software is still in its infancy within local companies having an internal audit function, as opposed to the IAS firms. CONCLUSIONS: Working papers together with the final audit report are the tangible output of the work done by internal auditors. Sufficient and appropriate audit documentation has to be recorded in order to provide work evidence and show that the objectives of the audit were achieved. IMPLICATIONS: It is expected that this dissertation would encourage internal auditors to consider more the importance of compiling adequate working papers as well as provide indications for firms how to improve the documentation process.