Question

Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

• A. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation.
• 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. Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.

Answer 1

The correct option is A The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation.

Only auditor has the right on his working papers and files, it may be made available to one who requires it, on demand; example: client, principal auditor, etc. in the given question. If there arises a case of litigation, these working papers may be obtained by third parties.

Note: Client is not responsible for auditor's working papers custody and Successors auditors can not have access to working papers of predecessor auditors. However, copy or extracts of the working papers can be made available to those who need them only with the prior approval of the owner of such working papers.