It seems obvious, but it isn’t
One of the key requirements of quality working papers is that they contain neither irrelevant information nor personal, subjective statements or opinions. It seems obvious, but during a recent external file review I was taken aback by what I found: personal observations, none too flattering, of an auditor on an auditee, right there, in the middle of the working paper.
Irrelevant storage is money wasted
There are a couple of reasons why this is so important. First, there is the most obvious reason. Whether kept physically or electronically, storage costs money. Irrelevant storage then is money wasted. The more clean and shed of irrelevant documentation your working papers are, the leaner they will be, the less they will cost to store over their intended lifespan.
Now, there is another side to this particular coin. Paraphrasing Einstein: “Keep it as simple as possible, but not simpler.” Relevant information, which is information supportive of and essential to arrive at the conclusion of the working paper, needs to remain in the working paper. Only when we are absolutely certain the underlying information cannot be altered and will be retrievable over the intended lifespan of the working papers can we accept it is stored outside of the working papers, for example in an ERP system. Yet, I would err on the side of caution.
Do not waste time of your hierarchical superior
Second, think about your audience when writing too much or putting irrelevant information in your working paper. Your hierarchical superior will need to review and sign off on the working papers. In order to be able to do that, he or she will need to read through what you have written and review what you have gathered in terms of information. If you make them read through irrelevant information, you will waste their time, which costs money, and you will most certainly negatively influence their opinion of your as a professional.
Show respect, always, even if there is no direct liability
Speaking about being responsible, third, think about respect. Any subjective, personal observation, especially when it is irrelevant for the intended purpose of the working paper, shows a lack of respect for both the auditee and your hierarchical superior. Now, I’m making abstraction of potential liabilities that may result if such working papers would ever become public. Fundamentally, it is all about having a correct, respectful attitude towards your auditees. After all, you do expect them to be correct and courteous to you too, right? Well, you need to extend them that same favor, including keeping your subjective, personal ideas about them to yourself. You are participating as a professional member of an audit team in an audit, not as a contestant or a judge in a reality show.
A general rule
Now, there is a general, rather obvious rule I once heard which stuck for me: “Do not ever write anything in a working paper which would negatively reflect on you if that working paper became public.”
Some working paper review ideas
A good exercise is to go through your working papers and look for indications of subjective writing. Indicators could be the use of verbs such as “feel”, “believe”, “think” as they indicate a certain leap of sorts, taken from objective, verifiable information to a position without adequate supportive evidence.
Also, you will want to look at the adjectives you use in your writing. Adjectives qualify, while the only subjective opinion an auditor should express in a working paper should be his conclusion on that specific working paper.
In conclusion
When writing working papers, make sure no irrelevant information or personal opinion creeps in. To avoid that:
- don’t overdocument: it costs money to store, it costs time (hence money) to review and it does not add value. But make sure you retain adequate basis for your conclusion in those working papers;
- be respectful: your personal opinions on people or situations have no place in working papers. Actually, as a general rule, they don not have any place, period. Don’t even share them with your colleagues. Keep it to yourself;
- be sparse in your writing: do not embellish your working papers with unnecessary words or words that express subjective positions. You are not wring a work of literary fiction. You are creating a basis for an opinion or an as objective as possible report.
And that’s why personal opinions and irrelevant information have no place in working papers.
Exploring The Black Box 