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INternal Audit Report
Transcript of INternal Audit Report
Responses * is a very important part of the audit process
* it communicates the objectives, procedures,
findings, and conclusion of a particular assignment
* it may be used as evidence of inefficiency in the
internal control system that requires a change of control procedures in the organization. INFORM : Tell what the auditors discovered
PERSUADE : Convince management of the worth and validity of the audit findings
GET RESULT : More management towards change and improvement PURPOSE OF INTERNAL AUDIT REPORT 1.Conducting Field Audit Exit Meeting
2.Preparing Draft Audit Report
3.Getting Department’s Responses
4.Preparing Final Audit Report
5.Performing Post-audit Survey
6.Performing Follow-up Audit PROCESS OF REPORT WRITING - it is a meeting where in the auditor-in-charge will meet with management to discuss the audit observations
- its purpose is to obtain further information from the management about the department being audited 1. Conducting Field Audit Exit Meeting - the department being audited will receive a copy of the draft report from the CEO, requesting management’s responses to the audit recommendations
- the responses must be submitted to the
CEO's office : the internal auditor will confirm the form and contents of the
draft report in the following steps: •Auditor in-charge schedules meeting on the last day of the field audit
•The auditee representatives attend the meeting to state their views concerning the auditor’s observations and to further questions.
•Auditor in-charge summarizes the discussions at the meeting.
•Both auditors and auditee representatives agree on the contents of draft report. 4. Preparing Final Audit Report - the CAE will prepare a final audit report after the responses to the draft report is received from the auditee 2. Preparing Draft Audit Report - once management of the department being audited agrees with the contents of the draft report, internal auditors will prepare a draft audit report for the entire audit engagement
- the draft report contains bothe audit observations and recommendations made by internal auditor
- the report includes an action plan that summarizes each of the recommendations 5. Performing Post - Audit Survey - the internal audit department will carry out a post-audit survey by sending survey forms to the department being audited for feedback and comments on the audit process. 6. Performing Follow - Up Audit - Internal auditors will perform a follow-up audit to review and report on the extent of implementation of recommended corrective actions from the previous audit. WRITING STYLE - there is no specified audit reporting style, internal audit works are reported in the format that is easy to understand and with sufficient contents and information
- the basic principle of effective writing is to be short and concise in delivering important information
- an effective design of the audit report means that the report is visually attractive and able to be read efficiently. To be effective, audit reports should focus on the needs of the target users; there are a variety of readers with different needs: a.Managers of the department being audited who must respond to audit findings and implement the improvement plan.
b.The CEO who must make a decision to implement new control systems or take corrective actions based on the findings and evidences.
c.Members of the audit committee who are mainly interested in conclusion and results from corrective actions. EXAMPLES : Rule : Write in the way you talk
The Wrong Way : The functional area attributed its operational deficiencies to a lack of personnel resulting from budget limitations…
The Right Way : The department said it could not do the job because it could not afford staff
Rule : Say what you mean
The Wrong Way : The accountant at headquarters serves in the same capacity for the branches
The Right Way : The HQ accountant also serves as accountant for the branches
Rule : Avoid redundant words – use as few as necessary
The Wrong Way : During the course of our audit we noted that invoices are…..
The Right Way : Invoices are…
Rule : Avoid posh language – keep it simple
The Wrong Way : We engaged in an audit commensurate with staff availability
The Right Way : We did the audit with available staff The following techniques can be used to better design the audit report: a.Use font type, style, and size that are easy to read.
b.Limit the line length so that eye travel is not tiring.
c.Limit number of lines in a paragraph to prevent skipping and to provide frequent rest points.
d.Provide white spaces for notes.
e.Indicate page numbers, headings, and sub-headings to help readers search for specific information.
f.Start a new topic on another page wherever possible.
g.Reduce the usage of capital letters because they decrease reading speed.
h.Use graphics and tables to add understanding of the statistics.