Preparation of working papers

Under ISA 230, the auditor prepares documentation promptly and in enough detail for an experienced auditor with no previous connection to the engagement to understand the work. The reviewer should be able to identify what was tested, the results, significant judgements, who performed the work and who reviewed it. mia.org.my

What to record	Worked example for Jengka Furniture’s bank loan
Heading and reference	Jengka Furniture Sdn. Bhd. — Loan interest expense — Year ended 31 December 2026 — L2.
Objective and assertion	Determine whether the company recorded the correct interest expense for the year. The main assertion is accuracy.
Evidence and procedure	Inspect the signed agreement for the fixed rate of 6%. Check the loan statement to establish that RM600,000 was outstanding for the full year. Recalculate the interest and compare it with the ledger.
Result	Expected interest is RM600,000 × 6% = RM36,000. The ledger shows RM33,000, giving a difference of RM3,000.
Investigation and conclusion	The loan statement shows RM3,000 of December interest accrued and payable in January. Management records the adjustment. The auditor checks the revised ledger and concludes that it now agrees with the recalculation.
Preparation and review	Record the preparer’s name and completion date, the reviewer’s name, the date and extent of review, and references to the agreement, loan statement and adjustment.

A note saying “interest checked” leaves the reviewer unable to tell whether the auditor checked the rate, the principal, the period or only the arithmetic. Recording those details makes the conclusion reviewable.