1. Presented by: CA Uday Sathaye Gokhale & Sathe Chartered Accountants
29 Dec 2012
EFFECTIVE CONCURRENT AUDIT REPORTING
Certificate course on Concurrent Audit of Banks
Presented by:
CA Uday Sathaye Gokhale & Sathe
Chartered Accountants

2. Audit Objectives: As per SA 700 issued by ICAI: Audit Objectives are :
29 Dec 2012
Audit Objectives:
As per SA 700 issued by ICAI:
Audit Objectives are :
To form an opinion on the Financial Statements
To draw conclusions based on Audit Evidence obtained
To clearly express the opinion through a Written Report
SA 700- Standard on Auditing (SA) 700 (Revised) Forming an Opinion and Reporting on Financial Statement
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

3. Audit Report Stages Planning Stage Draft Report preparation
29 Dec 2012
Audit Report Stages
Planning Stage
Draft Report preparation
Collection of data
Discussion
Final draft
Revising the Draft Report
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

4. 29 Dec 2012
Who are the readers ? Branch Compliance Department Controlling Office RBI Other Govt Agencies, etc.
An effective Audit Report should focus on its readers and should contain necessary details of
Discrepancies
Regulatory / Internal guidelines
Risk associated, etc
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

5. Consideration of SIA 4 in Reporting
29 Dec 2012
Title
Appropriate
Expressing nature of the Report
Addressee
Appropriately addressed
Report Distribution List
Mention of the recipients of the report
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

6. Opening or introductory paragraph
29 Dec 2012
Coverage
Identify the systems, processes, functional lines or other items of the entity
Opening or introductory paragraph
The operation of systems, procedures and controls are the responsibility of the entity’s management
The responsibility of the internal auditor is to express an opinion
Scope paragraph
Describe the scope of the internal audit
Describe that the internal audit was conducted in accordance with generally accepted audit procedures as applicable.
Executive Summary paragraph
Indicate the highlights of the internal audit findings, key issues and observations of concern, significant controls lapses, failures or weaknesses in the systems or processes.
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

7. Observations paragraph
29 Dec 2012
Observations paragraph
Mention the process name, significant observations, findings, analysis and comments of the internal auditor.
Comments from local management
The observations and comments from the local management of the entity provided after giving due cognizance to the internal auditor’s comments
Local management’s action plan or resolution of the issues and compliance to the internal auditor’s recommendations and suggestions
Action taken report
Appended after the observations and findings
It should include status of compliance / non-compliance w.r.t to previous internal audit observations and reasons for non-compliance thereof
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

8. Date, place & signature of the internal auditor
29 Dec 2012
Date, place & signature of the internal auditor
Signed by the internal auditor in his personal name
Membership No.
Communication to the Management
Discussion Draft
Exit Meeting
Formal Draft
Final Report
Limitation on scope
Describe the limitation
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

9. Report Writing Use of Language in Reporting: Sentence Formation
29 Dec 2012
Report Writing
Use of Language in Reporting:
Sentence Formation
Grammatical accuracy
Avoid use of biased language
Avoid use of Ambiguous Pronoun Reference
Avoid use of words like Generally, Mostly etc.
Use of too much technical words to be avoided
Use of Bullets
Answer each question and do not put symbols like -
Audit observations should be concise yet clear
Limited Use of Passive Voice
Passive voice sentences are used to emphasize the receiver of the action rather than the actor Eg.A report was presented to the stakeholders In the above example REPORT is more important than the auditor
It makes the writing unclear by keeping the identity of the actor secret
It often sounds awkward and evasive
Use of Passive voice sentences sparingly
Sentences with passive voice may be interpreted as an attempt to avoid admitting responsibility
Example- Passive: “A mistake was made that resulted in an overcharge to your account that has now been corrected and will be shown on your next statement”
Active: “Our data entry clerk made a mistake and overcharged your account, but she corrected the entry .Your next stamen will show the correction”
Use of passive voice language is acceptable when: 1The objective of the action needs emphasis. 2When the actor is unknown or not important.
Avoid use of ambiguous pronoun reference:
Example 1-“this is the cause of problem”(whether reader will be able to know what THIS means?)
Example 2-“the auditor told branch ,manager,he could correct the error” (one may interpret the sentence as branch manager can correct the error,or other may interpret it as auditor will do the same)
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

10. Report Writing (Contd…)
29 Dec 2012
Report Writing (Contd…)
Difference of opinion or understanding with Auditee should be spelled out clearly
Clarity about views to be presented in Report
Emphasis should be at proper places only s
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

11. General Guidelines for Report Format
29 Dec 2012
General Guidelines for Report Format
Selection of Font and consistency throughout the Report (Including Annexures)
Margins
Spacing
Tabs
Page size
Header and footer
Date and Time Formats
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

12. Value Addition to Audit Report
29 Dec 2012
Value Addition to Audit Report
Attachments / Annexures / Appendices
Executive Summary/Flash Report
Key Audit Findings
Sample Details
Revenue Leakage Statements
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

13. Conclusion of Audit Report
29 Dec 2012
Conclusion of Audit Report
Review internally before submission of Final Report :
Discussion with Auditee and necessary correction thereafter
Stamping/Initials/Timing
Keep proper Attendance Record
Cover everything and issue Certificates appropriately
Disclaimer should be properly given
Acknowledgment
CA Uday Sathaye
Gokhale & Sathe Chartered Accountants

14. Chartered Accountants
29 Dec 2012
CA Uday Sathaye
Gokhale & Sathe
Chartered Accountants