Source, purpose, procedures, results, conclusions. When I first started auditing, these so called “elements of audit documentation” were drilled into my brain by an anal-retentive audit supervisor so effectively that I could say them in my sleep.
That very strict audit supervisor made me put that stuff on every document! Sometimes I was more than a little annoyed at her tough audit documentation standards. But now that I have sat on the other side of the fence, as a reviewer, I get her — I totally get her.
The last thing you want as a preparer is to have some crazy, overworked supervisor making assumptions and leaping around trying to link ideas together! Guide them.
Defining and Matching the Elements of Audit Documentation
What do all these elements mean? Here are the questions that each element should answer:
SOURCE: Where did we get the evidence on the audit document? Who gave it to us? Which evidence did we look at? Where is the evidence and how can we get to it again?
PURPOSE: What question does this working paper seek to answer? Why was this document created and why was this work done? What program step does it satisfy?
PROCEDURES: What did we do to gather evidence and support our conclusions? What methodology did we use? What were the detailed steps and procedures we performed?
RESULTS: What did the procedures yield? What were the results of applying the methodologies? This should contain the same language and link back easily to the procedure element. Here we also want a lot of detail.
CONCLUSION: What is the answer to the question posed in the purpose? Was the program step satisfied? What did we do with any issues we found? Did we take the issues to a finding or a point disposition sheet?
Did you notice the linkage among the elements? If you do it right, the purpose and conclusions match and the procedures and results match. This proves your clear thinking and supports your logical conclusions.
Here is a simple example. (And you auditors of financial aid out there — please realize I made this up on an airplane after a long day of teaching. If you must critique it, please send your comments to firstname.lastname@example.org.)
SOURCE: Student files maintained in the Student Financial Aid Office by Julie Neal. Access granted and supervised by Julie Neal on March 21, 2019. Tested fall semester 2018 students as listed by the Bursar’s Office report of students available on the university intranet under “enrolled students”. Eligibility requirements defined by grant requirements included in this file at A-5.
PURPOSE: To determine if students receiving federal student financial aid are eligible. To satisfy program step 2 at A-PGM.
PROCEDURE: Sampled 72 files out of a population of 13,500 files. Examined each file to determine if the proper paperwork was in the file and that the student met federal eligibility requirements. The attributes tested are as follows:
Bla bla bla bla
Bla bla bla bla
Bla bla bla bla
RESULTS: Out of all attributes tested on 72 files, we only noted one error. The student had failed to initial one of the pages of the financial aid application.
CONCLUSION: The 72 students we tested that received financial aid are eligible. The one error noted is not significant and we will not take it to the report.
Empathy or Self-Interest — Whatever Works!
That kind of information couldn’t be any more helpful to a reviewer. Without it, the reviewer has to piece the story together themselves after combing through the data and different pieces of documentation. Since we all know that five people can look at the same set of data and come to five different conclusions, you, the auditor, need to be making those conclusions for the reviewer.
And if empathy for the reviewer (and concern for your career trajectory) doesn’t make you want to put that stuff on your working papers, maybe a little self interest will. I, too, preferred what I thought was the easy way out and took shortcuts with my audit documentation. But the older you get, the more you see that taking the easy way out now often costs us BIG later, right?
On my first year of a project, I did a shoddy job documenting my work. I was out from under the wings of the anal retentive supervisor and thought I’d try it my own way. I didn’t put the source, purpose, or procedures on most of my audit documents.
Miraculously, it passed through review. (I think the reviewer had other things on his mind — like troubles with his wife).
Lo and behold, the next year I was assigned to do the same task again. I had to use my own audit documentation from the year before to guide my audit. Boy, was I mad at me! I had to go back and do much of the ground work all over again. I had to ask the wrong people for the wrong stuff all over again. I had to tiptoe around the client because I didn’t want to admit that I had forgotten everything they had told me about their records and program the year before.
I tried my hardest to conceal my bad memory and bad documentation, but they figured me out. One guy said, “I feel like you were just in here asking me the same questions. Didn’t you write any of this down?” HA — busted. The answer was “No, so will you help me again?” Not cool.
Needless to say, I was scrupulous about putting the source, purpose, procedure, results, and conclusion in my audit documentation from then on.
Staff Torture May Help
If you happen to be a supervisor struggling with your team’s audit documentation, try a mild, but edifying, torture technique: make them review another auditor’s work!
Give your staff access to – or a physical copy of – an un-reviewed set of audit documentation and give them two days to review it. Make sure the auditor who created the audit documentation was working on something relatively complex and that the auditor didn’t use ‘source, purpose, procedures, results, and conclusion’ to describe most of their work.
Don’t help them. Don’t let them talk to each other. This is to simulate the experience of a lonely, haggard audit supervisor stuck with a set of unintelligible audit documentation.
Let them flounder around for two days and then at the end of day two, hold a short meeting where you let them vent about how hard it was to perform the review. Then smile knowingly and then show them the cure.
This will show them that putting the source, purpose, procedures, results, conclusion on critical pieces of their audit documentation can keep everyone from going cray cray!
Putting those elements on a working paper also help you comply with GAO Government Auditing Standards regarding audit documentation.
Want to learn more about audit documentation standards? Check out Essential Skills for the Government Auditor.