Working Papers

60.8 – Working Papers (Rev. 27, 12-19-03) AICPA Standards and GAS require that "a record of the auditors' work should be retained in the form of working papers." An additional working paper standard requires that "working papers should contain sufficient information to enable an experienced auditor having no previous connection with the audit to ascertain from them the evidence that supports the auditors’ significant conclusions and judgments." A. Definition Working papers contain evidence accumulated throughout the audit to support the work performed, the results of the audit, including adjustments made, and the judgment of the auditors. They must stand on their own without the need for supplemental explanation or documentation. Working papers are the records kept by the auditor of the procedures applied, the tests performed, the information obtained, and the pertinent conclusions (findings, no findings, dollar adjustments) established during the audit. Examples of working papers are audit programs, analyses, memoranda, letters of confirmation and representation, abstracts of provider documents, and schedules or commentaries prepared or obtained by the auditor. Working papers may be in the form of data stored on tapes, film, or other media. Prepare and maintain working papers, the form and content of which should be designed to meet the circumstances of a particular audit. The information contained in working papers constitutes the principal record of the work that the auditor has done and the conclusions that the auditor reached concerning significant matters. B. General Content of Working Papers Working papers should ordinarily include documentation showing that: • The work has been adequately planned and supervised. This includes consideration of the audit requirements of Medicare and any other payers, which are part of a common audit with Medicare. • The audit evidence obtained, the auditing procedures applied, and the testing performed have provided sufficient, competent evidential matter to support the auditor's conclusions. C. Format of Working Papers Ensure that the working papers are prepared using the following standards. Start each individual working paper with the basic mechanical foundation containing: • Provider name, number, and cost reporting period. • Preparer's signature or initials. • Date the work was performed. • Proper heading, giving basic content of the working paper. • Working paper number or reference. • Purpose–A brief description of the work to be done on the working paper and the objective to be achieved (e.g., a comparison of the contractor’s PS&R with the as- filed settlement data to validate the provider's claimed Medicare statistics). • Source of Information–This informs the reviewer where the information used on the working paper was obtained. The source can be a description of the particulars, e.g., Medical Records Admission Register, or it can be in the form of cross-referencing to the cost report, financial statements, or other working papers. Cross-referencing is especially important because it enables the reviewer to see at a glance exactly where an amount, number etc. comes from. Copies, or if appropriate samples, of the information/ documents examined must be retained in the working papers. • Scope of Work–The stated scope of work should enable a reviewer to determine if an adequate test was performed to meet the scope of the audit purpose. • Explanation of Tick Marks– Use tick marks to explain and cross-reference the work performed. • Conclusion–When a working paper is complete, the contractor shall state conclusions covering the results of the audit activity. − EXAMPLE: No exceptions were noted in the test; therefore, the as-filed number of full time equivalent (FTE) residents used for GME payment is accepted. − EXAMPLE: Exceptions were noted in the number of FTE residents used for GME payment. An adjustment is proposed to correct the as-filed GME FTE statistic. Furthermore, the working papers should: • Be legible, complete, and accurate in order to provide proper support for findings, judgments, conclusions, and to document the nature and scope of the work conducted • Contain sufficient information so that supplementary oral explanations are not required; • Include summaries and lead schedules, as appropriate; • Contain adequate indexing and cross-referencing to the audit program, lead summaries, and adjustment report. (Each audit step that is initialed on the audit program should contain a reference to the “specific” working paper on which this step was addressed. It is not acceptable to just reference the general working paper series for an area under each audit step for that area. For example, include a reference to W/P 13-1(a) instead of W/P 13 series. Also, if you reference a specific working paper under the first audit step pertaining to an area/issue, do not draw a vertical line from that reference through all other audit steps for that area unless all the audit work for all those audit steps was actually detailed on that working paper. • Restrict information to matters that are materially important and relevant to the objectives of the audit; • Contain evidence of supervisory review of the work including initials. • Include an index to working papers for ease of reference. • Include the audit program. However, do not retain pages of a standard audit program that are not applicable to the audit. If in the audit program for a specific provider you retain audit steps from the standard audit program that were not scoped, mark them “N/A” instead of leaving them unmarked. D. Ownership and Custody of the Working Papers Working papers are the property of the auditor. The auditor's rights of ownership, however, are subject to ethical limitations relating to the confidential relationship with providers. Adopt reasonable procedures for safe custody of working papers in the field as well as in your office in accordance with the Health Insurance Portability and Accountability Act (HIPAA) and retain them for a sufficient period of time to meet the needs of your operation and to satisfy legal requirements of record retention. When requested, send original working papers to the appropriate CMS component or CMS’ designated agent for review.