Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?
Correct answer: D. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
- A. Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.
- B. The safe custody of working papers is the responsibility of client, if kept at his premises
- C. The working papers must be retained by an audit firm for a period of 10 years
- D. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
Explanation
Working papers belong to the auditor, but courts or other authorized third parties may obtain them when they are relevant to litigation. A successor auditor normally needs the client's permission before accessing the predecessor's papers.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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