ABC Audit Firm is conducting an audit of XYZ Corporation, a manufacturing company, for the fiscal year ending December $31,2023.$ As part of the audit process, the audit team meticulously prepares and maintains audit workpapers to document their procedures and findings.

During the planning phase of the audit, the audit team reviews XYZ Corporation's financial statements, assesses inherent risks, and identifies areas requiring special attention. They document their risk assessment and audit plan in the audit workpapers, outlining the scope of the audit and the specific procedures to be performed.

In the fieldwork phase, the audit team conducts substantive testing and gathers audit evidence to support their findings. They examine XYZ Corporation's inventory records, perform test counts, and reconcile inventory balances to the general ledger. All procedures and findings are meticulously documented in the audit workpapers, including the details of inventory sampling, test results, and any discrepancies noted.

Additionally, the audit team reviews XYZ Corporation's accounts receivable aging schedule and performs confirmation procedures with customers. They document the confirmation requests sent and received, along with any responses or exceptions noted. These details are recorded in the audit workpapers to provide a clear trail of the audit procedures performed and the evidence obtained.

Throughout the audit engagement, the audit workpapers serve as a reference for the audit team, allowing them to track their progress, document their findings, and ensure compliance with auditing standards. The workpapers also facilitate communication and collaboration among team members, enabling a seamless audit process.

At the conclusion of the audit, the audit team compiles their findings and conclusions in the audit workpapers. They document any significant issues identified during the audit, along with recommendations for corrective action. The completed workpapers provide a comprehensive record of the audit engagement, ensuring transparency and accountability in the audit process.

Objective Question:

What is the primary purpose of audit workpapers in the case study?

A$)$ To advertise audit services to potential clients

B$)$ To document audit procedures and findings

C$)$ To communicate audit findings to clients

D$)$ To generate revenue for the audit firm