Audit working papers are the documents and records that auditors prepare and retain to support their audit opinions and conclusions. They include planning documents, risk assessments, audit programs, evidence of audit procedures, audit findings, audit reports and communication with management and those charged with governance.
The Audit Working Papers Regulations 2023 are a set of rules issued by the Isle of Man Financial Services Authority (FSA) to enhance the quality and consistency of audit working papers and to facilitate the FSA’s oversight of audit firms and auditors. The regulations apply to all audits of financial statements of entities that are regulated by the FSA or that are required to be audited under Isle of Man law.
The Isle of Man Audit Working Papers Regulations 2023 came into operation on 1 November 2023. These regulations apply to audits of financial statements for periods ending on or after 31 December 2022
The Isle of Man Audit Working Papers Regulations 2023 have several implications for audit clients:
- Sharing of Audit Working Papers: The regulations propose legislation under the Companies Acts of 1982 and 2006 to require predecessor auditors to share audit working papers with successor auditors.
- Access to Audit Working Papers: With effect from 1 November 2023, the regulations require the predecessor auditor of a company’s financial statements to allow the successor auditor access to audit working papers and other relevant information.
- Timely Provision of Audit Working Papers: The predecessor auditor is required to provide the audit working papers to the successor auditor on a timely basis.
- Confidentiality and Data Protection: The predecessor auditor must ensure that any information shared with the successor auditor is used only for the purposes of the successor’s audit of the company concerned and must not be disclosed to another person unless required by legal or professional obligation.
The Audit Working Papers Regulations 2023 will have a significant impact on the audit work in the Isle of Man. Auditors will need to ensure that they comply with the regulations and that they document their work properly and thoroughly. Audit firms will need to implement appropriate policies, procedures, systems and controls to monitor and review the quality of their audit working papers. Business owners will need to be aware of the increased scrutiny and accountability that their auditors will face from the FSA and that they may be required to provide more information and evidence to support their financial statements.
The FSA has stated that its aim is to promote high standards of auditing in the Isle of Man and to protect the public interest. The Audit Working Papers Regulations 2023 are part of its efforts to achieve this goal. By complying with the regulations, auditors can demonstrate their professionalism, competence and integrity and enhance their reputation and credibility in the market.