What are working papers in the context of an audit?

Working papers in the context of an audit refer to the documentation of audit evidence collected during the audit. They serve as a record of the audit procedures performed, evidence obtained, and conclusions reached. These papers are crucial because they provide the necessary support for the auditor's opinion on the financial statements being examined.

The purpose of working papers is to ensure that there is a clear, detailed trail of documentation throughout the audit process. This documentation must be sufficient to allow another auditor, with knowledge of the industry, to understand the nature of the audit steps performed and the rationale behind the conclusions drawn. Working papers also help facilitate the review process and can be useful in the event of any questions or disputes regarding the audit findings.

In summary, working papers are integral to the audit process as they encapsulate all pertinent evidence and support the auditor's conclusions, making them a vital component of an effective audit.