(a) Reasons for Preparing Audit Working Papers

1. Enhances the quality of the audit by ensuring thorough documentation.
2. Facilitates effective review and evaluation of audit evidence and conclusions before finalizing the audit report.
3. Ensures accuracy as documentation prepared during audit work is likely to be more reliable than that prepared later.

(b) Other Purposes of Audit Documentation

1. Assists the audit team in planning and performing the audit.
2. Provides a basis for supervising audit work.
3. Holds team members accountable for their assigned tasks.
4. Maintains records of issues significant to future audits.
5. Enables quality control reviews or inspections by experienced auditors not previously involved with the audit.

(c) Items in the Permanent Audit File

1. Legal constitution of the company or entity.
2. Key contracts, such as loan agreements.
3. Summary of business history, development, and ownership.
4. Summary of accounting systems and procedures.
5. Prior years’ financial statements with key ratios and trends.

(d) Difference Between Permanent and Current Audit Files

The Permanent Audit File contains information of ongoing relevance for future audits, while the Current Audit File focuses on information specific to the current year’s audit. The Current File is updated annually, whereas the Permanent File is only updated as necessary.