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Increasing Audit Profits Series No. 20--Becoming Paper-less Using Hardcopy or Electronic Documentation

Aug 1st 2011
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While it may sound like an oxymoron, becoming paper-less using hardcopy is the first step to becoming paperless electronically for accounting and auditing engagements.  It also is a major key to increasing audit profits!  Laying our personal preferences aside, making the changes presented in this blog can significantly reduce engagement time charges.  

I’ll discuss these considerations for becoming paper-less: 1) Eliminating copies of client documents, 2) Including only required working papers, 3) Writing more memos.

Eliminating Copies of Client Documents

Copies of bank statements, accounts receivable trial balances, perpetual inventory records, vendor invoices and other client documents are not required by SAS No. 103, Audit Documentation.  Specific identification and documentation of data, documents and records inspected while performing auditing procedures is required; copies are not.  Eliminating copies of client documents can eliminate time charges for heading, indexing and cross-referencing the documents, as well as costly preparation and review time.

Including Only Required Working Papers

Uniformity among engagements is one of the purposes of a system of quality control for a CPA firm.  Developing policies for standard documentation content and format will enable preparers and reviewers to spend less time creating and finalizing audit documentation.  Recognizing different needs for clients that vary according to their nature, size and complexity, and designing standard documentation packages for each, will contribute to both higher quality and greater efficiency.

Writing More Memos

To enable an experienced reviewer to understand what an auditor did, found and did about what was found (as required by SAS No. 103), audit documentation must indicate procedures performed and documents examined, describe exceptions or unusual matters discovered and record the auditor’s  responses and actions.  

Using a modified audit program that describes specific requirements of auditing procedures (such as the number of sample units and the selection methods) can enable an auditor to prepare memo documentation instead of detailed working papers.  The memo could begin by referencing a specific procedure in the audit program, specifically describe data, documents or records inspected and include a list of exceptions or unusual matters and additional substantive procedures performed by the auditor.  Memo documentation of this sort will almost always take less time than preparing detailed working papers.

Here’s the bottom line of this discussion:  By making every effort to become paper-less, profitability on accounting and auditing engagements can be substantially increased.  These and other ways to increase audit profits are discussed in my live and on-demand webcasts that can be accessed by clicking the applicable box on the left side of my home page,



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