[Anonymous]

For the auditors out there, I am curious what your experience is with documenting work papers.

Can you provide examples of how detailed your documentation gets at your firm?

You are free to use any example, but say, for example, a non-recurring expense increases substantially in the current year compared to the previous year.

What specific procedures do you implement and how do you go about auditing this account and documenting the reason for the significant increase?

Or say AR decreased substantially from the prior year…can you give details on the different scenarios/possibilities that you have encountered and generally how in depth is your documentation and audit procedures?

[Bluetoothray]

As I work for one of the Big4 I'd just warn everyone to be careful. I know that for my firm we aren't allowed to take templates or guidance and share it with others.

[Anonymous]

I agree, I'm not interested in any proprietary templates or information, so please don't share that information if you aren't comfortable.

Just interested in general information mostly, curious how different other's experiences are.

[Anonymous]

We had an Analytical Procedures spreadsheet that was basically a flux analysis. Its no big deal. You just export the trial balance for last year and this year, and put them in columns side by side. In the next columns, calculate the % change and the $ change.

Then you formulate expectations. Do you expect this year to be about the same as last year? Are revenues about the same? When you made inquiries to management, did they mention any major events or changes? Maybe they lost a major customer, so you expect revenues to be down and thus expenses will be down. For example, you could decide that you want to ignore everything except those accounts that changed over 25% and had a $ change of over $500k. Document your expectations and why.

Then go down your spreadsheet and highlight the accounts that do not meet your expectation so you can inquire further, if needed. Document next to each account why it showed so much change. For example, you might look through the general ledger and see that they went to an expensive trade show to try and generate sales, so marketing expense is way high this year. Or, inquire of management to see why its different.

Other than the flux analysis, you would also calculate a variety of accounting ratios to look for changes. Check the changes overall to see if anything doesn't flow together. For example, if revenues are up, but operating expenses are down… how did they do that? Usually expenses go up when revenues go up.

For AR, you would do more investigation since its a major account. AR turnover is a good one. Run an outstanding balances report and inquire about large or old outstanding balances. Do they expect to collect these balances? Maybe they changed a collection policy this year. Or maybe one of their major customers decided they would start paying earlier because they landed a new line of credit. Maybe sales were way low so AR balance is low, too.

The people running the audit will decide whether or not to do more auditing procedures or increase sample sizes in that account if it looks concerning enough.

[Wannafree]

@Chynablue ,looking at your 3 expired subjects and 2 times 74 ,one time 71 I will pray for you.too much.You are very strong person.I wish you good luck.

[Author]

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