What is the incorrect statement about the ownership of working papers?

The correct answer highlights a key misunderstanding regarding the nature of working papers within the context of auditing. Working papers are primarily internal documents created by the CPA during the audit process. They serve as a record of the auditor's work, including evidence gathered, analyses performed, and conclusions reached.

The statement in question incorrectly suggests that working papers encompass reports submitted to clients, which is not accurate. Reports, such as the auditor's opinion letter or management letters, are formal communications that conclude the audit and are intended for the client's use. In contrast, working papers are meant for the auditor's reference and typically remain confidential, forming the basis for the reports but not being categorized as reports themselves.

By understanding that working papers are distinct from client-facing reports, it becomes clear why the statement in question is incorrect. Working papers are tools used by auditors to substantiate their findings and ensure compliance with auditing standards, while reports are the final products shared with clients.