Audit Finding Components

1
Audit Finding Components

• Condition
• Criteria/Standard
• Effect Relate to 5 Control Objs.
• Cause
• Recommendation
• Note Exh. 14-8 is a variation of this model

2
Recommendation Considerations

• Does it solve the problem?
• Is it feasible for the BPO?
• Is it compatible with the BPOs ops.?
• Is it cost effective?
• Is it a long or short-term solution?

3
Assessing BPOs Comments

• Financial statement assertions
• Internal control assertions
• See Exhibit 14-4

4
Other Issues-COSO Model

• Audit Findings Summary (pps. 14-11 to 14-13)
• S-C-O-R-E classification
• Impact and likelihood
• Flows into Risk Matrix
• Supports C3ER model
• Note alternative approach in Exhibit 14-12

5
Reporting Standards

• Signed written report
• Pre-issuance discussion
• Clear, objective reporting
• Purpose, scope results required
• Recommendations optional
• Auditee response optional
• Review of report distribution

6
Report Use

• Audit Staff
• Work summary
• Action catalyst
• Training
• Evaluation
• Follow up

7
Report Use

• Operating Management
• Action catalyst
• Support
• Visibility
• Evaluation
• Top Management
• Visibility
• Audit scope
• Objective insight

8
Closing Conference

• Audit review
• Major findings
• Other findings
• Report review logistics
• Audit conduct feedback
• Thank yous

9
Report Model

• Cover
• Formalities
• Executive Summary
• Findings
• Major
• Other
• See summary at 14-22 to 14-23

10
Effective Writing

• Gather information
• Conversational style
• Keep it short simple
• Active voice
• Familiar vocabulary
• Use captions
• Use italics and white space
• Use graphics footnotes

11
Other Reporting Issues

• Interim updates
• Distribution
• Audit Committee
• Senior Management
• Department Management
• Internal Audit
• External Audit

12
Auditor Follow-up Role

• Timely review
• Share the results
• Respect BPOs input
• Minimize BPO interference
• Emphasize preventative cost of quality

13
Auditor Follow-up Sequence

• Read BPOs response
• Discuss response with BPO
• Consider give-away items
• Conduct on-site reviews
• Reassess the risk
• Report

14
Win-win Considerations

• Do not force preferences
• Focus on the what not the how
• Avoid operations abandonment
• Know when to hold them and when to fold them
• Never attack individuals
• Resolve verbally first

15
Audit Evaluation

• General description
• What worked
• What did not work
• Recommendations