1. INTERNAL AUDIT COMMUNICATIONS AND REPORTING (10 - 18%)
MODULE 6
INTERNAL AUDIT COMMUNICATIONS AND REPORTING
( %)
Lecturer:
Dale Neuls, BA, CGA
DN 14/15

2. questioning and listening comprise audit interview
AUDIT INTERVIEWS
questioning and listening comprise audit interview
strong interpersonal and communication skills
testimonial evidence
interview questions developed during planning (role play)
client answers - concern with bias and/or partial knowledge
should be supported by documentary evidence

3. 7 step approach to interviews
focus on win/win
both auditor and client achieve satisfaction rather than win/lose philosophy where one side gains at expense of other side
7 step approach to interviews
planning
scheduling
opening
conducting
closing
documenting
evaluating

4. four types of audit interviews
preliminary interview (planning)
evidence gathering (examination)
follow-up interview (examination)
exit interview (examination)
discuss preliminary findings
discuss contents of draft and final reports and timing/distribution

5. inform/persuade/get results
INTERNAL AUDIT REPORT
final product of audit
quality of audit process dependent on quality of audit report
developing, obtaining client approval and issuing audit report is most important phase of IA process
inform/persuade/get results

6. objectives of audit reports
Document results of audit work (OSFCR)
Provide framework for management action (evaluation of current operational practices)
Present client views (fair and unbiased - management comments)
Provide basis for audit follow-up
Express an opinion on adequacy of risk management, control and governance within organization

7. EA REPORTS vs IA REPORTS
both reports result from independent/objective evaluations of actual conditions compared to standards/criteria acceptable to auditor and client
both reports contain description of objectives, scope of work and conclusion

8. both reports for credibility and value depend on absolute factual accuracy prepared without influence or bias
EA has standardized report format while IA report format varies depending on type of engagement

9. REPORT QUESTIONS FOR SENIOR MANAGEMENT
Are the audit matters related to risk management, control or governance?
What is the overall condition of the area? Should we be worried or reassured?
How significant are these matters within the whole organization (integrity and ethical values)?

10. What is the value of acting/risk of not acting on audit recommendations (management philosophy and operating style)?
What is being done to prepare an action plan to address audit recommendations (assignment of authority and responsibility)?

11. IIA AUDIT REPORTING STANDARDS
Communicating Results
Internal auditors must communicate
engagement results
Standard 2500
Monitoring Progress
CAE must establish and maintain
system to monitor disposition of
results communicated to
management 

12. COMMUNICATING RESULTS STANDARD 2400
signed written report should be issued when audit completed
IA should discuss conclusions and recommendations with management before issuing final report (management comments)
reports should meet characteristics of good audit report

13. reports should present objective, scope and results of audit
reports should include conclusions and recommendations for improvements and acknowledge satisfactory performance
CAE should review/approve final report and decide distribution (client)

14. management discussion
DRAFT AUDIT REPORT
audit observations
criteria vs condition = finding
stress positives
recommendations
feasibility
cost/benefit
adequacy of standard as criteria
management discussion
clarify inaccurate facts, findings and conclusions
promote client relations
obtain management comments for inclusion in final report

15. distribution determined by IA/client (planning memo)
FINAL AUDIT REPORT
dated at final version
distribution determined by IA/client (planning memo)
head of audited unit
heads of other units referenced in report e.g. IT, HR
president/CEO
audit committee
EA (discretionary)

16. CHARACTERISTICS GOOD AUDIT REPORT
Objective
unbiased
Accurate/Clear
factual
easily understood
Concise
executive summary
Constructive
report focus on systems and practices (help client)
tactful tone which emphasizes solutions rather than problems
Complete/Timely
IA credibility and effectiveness

17. CONTENTS OF AUDIT REPORT
Audit entity
Background information
Audit objectives (purpose)
Audit scope (extent of review)
Acknowledgement
Executive summary (summary major findings)

18. Detailed findings and recommendations
audit objective
audit criteria
nature of finding
cause/effect
conclusion (audit objective)
recommendations
management comments

19. MONITORING PROGRESS STANDARD 2500
CAE establish and maintain system to monitor disposition of results communicated to management
management assume risk of not taking appropriate action on audit findings (standard 2600)
risks should be contained within the risk tolerances established by corporate risk management process

20. MONITORING PROGRESS 6 step process for follow-up program
Determining Scope of Follow-up
Assessing Relevance of Previous Observations and Recommendations
Determining Status of Corrective Action Taken/Planned by Management
Preparing Follow-up Program
Carrying Out Follow-up Program
Assessing Extent of Corrective Action Taken and Progress Made
Reviewing Follow-up Audit Files
Reporting Results of Follow-up (OSFCR)