The Little Things Make a Huge Difference—Source, Purpose, Procedures, Results, Conclusions

November 2004

Source, purpose, procedures, results, conclusions. When I first started auditing, these so called “elements of a working paper” were drilled into my brain by an anal-retentive audit supervisor so effectively that I could say them in my sleep.
 
That very strict audit supervisor made me put that stuff on every working paper! Sometimes I was more than a little annoyed at her tough documentation standards. But now that I have sat on the other side of the fence—as a reviewer—I get her—I totally get her.

Without these elements of a working paper, it is mighty hard to tell what the auditor was thinking. The reviewer has to make all sorts of logical leaps and assumptions to get through the working papers.

The last thing you want as a preparer is to have some crazy, overworked supervisor making assumptions and leaping around trying to link ideas together! Guide them.

Defining and Matching the Elements

What do all these elements mean? Here are the questions that each element should answer:

SOURCE: Where did we get the evidence on the working paper? Who gave it to us? Which evidence did we look at? Where is the evidence and how can we get to it again?

PURPOSE: What question does this working paper seek to answer? Why was this working paper created and why was this work done? What program step does it satisfy?

PROCEDURES: What did we do on this working paper? What methodology did we use? What were the detailed steps and procedures we performed?

RESULTS: What did the procedures yield? What were the results of applying the methodologies? This should contain the same language and link back easily to the procedure element. Here we also want a lot of detail.

CONCLUSION: What is the answer to the question posed in the purpose? Was the program step satisfied? What did we do with any issues we found? Did we take the issues to a finding or a point disposition sheet?

Did you notice the linkage among the elements? If you do it right, the purpose and conclusions match and the procedures and results match. This proves your clear thinking and supports your logical conclusions.

An example

Here is a simple example. (And you auditors of financial aid out there— please realize I made this up on an airplane after a long day of teaching. If you must critique it, please send your comments to www.leitadoesntwannahearit.com.)

SOURCE: Student files maintained in the Student Financial Aid Office by Julie Neal. Tested fall semester 2004 students.

PURPOSE: To determine if students receiving federal student financial aid are eligible. To satisfy program step 2 at A-PGM.

PROCEDURE: Sampled 72 files out of a population of 13,500 files. Examined each file to determine if the proper paperwork was in the file and that the student met federal eligibility requirements. The attributes tested are as follows:
 
     Bla bla bla bla
     Bla bla bla bla
     Bla bla bla bla

RESULTS: Out of all attributes tested on 72 files, we only noted one error. The student had failed to initial one of the pages of the financial aid application.

CONCLUSION: Students receiving financial aid are eligible. The one error noted is not significant and we will not take it to the report.

Empathy or Self-Interest—
Whatever Works!

That kind of information couldn’t be any more helpful to a reviewer. Without it, the reviewer has to piece the story together themselves and we all know that five people can look at the same set of data and come to five different conclusions! You, the auditor, needs to be making those conclusions for the reviewer.

And if empathy for the reviewer doesn’t make you want to put that stuff on your working papers, maybe a little self interest will. I, too, preferred what I thought was the easy way out. But the older you get, the more you see that taking the easy way out now often costs us BIG later, right?

On my first year of a project I was on for three years I did a shoddy job documenting my work. I was out from under the wings of the anal retentive supervisor and though I’d try it my own way. I didn’t put the source, purpose, or procedures on many of my working papers.

Miraculously, it passed through review. (I think the reviewer had other things on his mind—like troubles with his teenage kids).

Lo and behold, the next year I was assigned to do the same task again. I had to follow up on my own working papers. Boy, was I mad at me! I had to go back and do much of the ground work all over again. I had to ask the wrong people for the wrong stuff all over again. I had to tiptoe around the client because I didn’t want to admit that I had forgotten everything they had told me about their records and program the year before.

I tried my hardest to conceal my bad memory and bad documentation, but they figured me out. One guy said, “I feel like you were just in here asking me the same questions. Didn’t you write any of this down?” HA—busted. The answer was “No, so will you help me again?” Not cool.

Needless to say, I was scrupulous about putting the right info in my working papers from then on. If it wasn’t me picking up the working papers next year, it would be some other auditor who would talk bad about me and my shoddy, hard-to-follow documentation.

Staff Torture May Help

If you happen to be a supervisor struggling with your team’s working papers try a mild torture technique. One of the best ways to teach people to do better working papers is to make them review a set of working papers themselves.

Give your staff a copy of an un-reviewed set of working papers and give them two days to review and make their review comments.

Don’t help them. Don’t let them talk to each other. Let them flounder around.

This will show them that putting the source, purpose, procedures, results, conclusion on every working paper is vital to be able to tell the logic the author used in creating the working paper!