The first ingredient of a high value internal audit report is simply its perfect clarity. Auditors job will be to use clear facts. This seems easily achievable if you carefully write the report; it is however not so common to always find clear facts, even among carefully written reports !
This first good practice, like any other in this blog, assumes that auditors follow basic audit principles. The first one is the absolute need to rely on hard facts based on documents. Nevertheless this first principle is not enough to insure the audit report quality.
Describe clearly and simply a human reality, often complex and full of different points of view, is much more difficult than it seems. Hard facts are not sufficient to get clarity. Indeed, an audit is like a food recipe; high quality ingredients (the audit facts) do not guarantee the quality of the meal.
What makes a report is clearer than another? How to deliver value for money audit ? I modestly suggest the following best practices based on my experience of 20 audit reports over 5 years. I also had the opportunity to read many others. It gradually dawned on me that this essential clarity is really hard to obtain, but also some solutions exist. I had the opportunity to continuously build those best practices found and today i gather them in this blog.
1- Clear facts : quantify audit findings (with numbers) and explain the business impacts
A clear fact is a normal audit finding accompanied with numerical data. Yes, we do need numbers here ! It gives information on how big is the fact (kilometers, staffing, financial amounts, number of clients, etc.). Of course, facts must be quantified without drowning the reader. Too much information dilute the important ones in those that are secondary. Without quantifying and explaining the impact, especially on the financial aspect, it will not be possible for both the auditor and the reader to understand audit findings. In order to identify which findings are relevant to include in the report, we must translate them into potential consequence in whatever is important for for the entity: loss of turnover or profitability, impact on customer satisfaction, etc.
A good hard fact expressed without significant business consequences will be clear … but not relevant. Here too, in terms of business consequences, the correctness of the reasoning, causation, must be indisputable. For experienced auditors, it becomes a discipline to write clear facts (quantify the findings and explain their impact). Indeed it is by adopting this quantification discipline that the auditor is able to retain only significant findings and get rid of the findings with minor impacts.
This present text is for instance a weakness of my Posts as it gives very little quantitative elements. It would for example be interesting to know what proportion of audit reports express unquantified observations. This Blog is actually not an audit based on facts; it is only sharing experience. It also lacks examples from audit I have done. Every auditor must respect confidential information to which they have access. I decided to avoid any example of my past experience.
2- Eliminate redundancies : they are clear facts killers
An extremely common flaw disturbing clarity of a report is the redundancy of the same finding. Redundancies mislead the reader who is then unable to forge its own opinion. Beyond discomfort due to this rehearsal, there is a high risk of presenting this same finding with different views (positive or negative). Doing so will strongly disorient the reader.
This dual appreciation is seemingly contradictory but indeed possible if these findings are used to answer different audit questions. It is true that the same fact can be analyzed from several point of views.
Consider a case of fraud. If the entity has taken steps to ensure this does not happen again, is this a negative finding (fraud) or positive (the action taken by the entity)? A wrong way to report this finding would be to do both together (redundancy). A negative fact in the report section devoted to the topic “fight against fraud” and a positive finding (the same finding) in the section devoted to “risk management system” (as the entity made the right action). To write a clear report auditors must not do this (redundancy). The auditor must use each finding once in the best section of the report. In the example above, probably it will depend on other factors such as history of fraud in the entity, or evaluation of the adequacy of the action taken (is it deemed sufficient to avoid it happening again?).
The auditor must take a single evaluation of the fact and use it only in one place the report, or he will loose the reader. Dear auditors, you should hunt this flaw, as it is extremely frequent to see it ; and remember that fresh reader are very sensitive to it.
3- Eliminate strictly any jargon (i.e. specialized vocabulary): they cannot be clear facts
Auditors do not write internal audit for experts. They are written for top management (usually the board members) and sometime external readers. All of them usually do not know in details the business and its jargon. In addition, I have observed that, even for knowledged readers, the use of jargons has a negative influence on clarity.
It is quite surprising to realize that a report written with common words make it even more clear. Eliminate the jargon of audit report is an ongoing effort of the auditor towards a report as clear as possible. Isn’t it true that “what is conceived well is expressed clearly, and the words to say it come easily?” (As said by aFrench writer N.Boileau, 1815).
– – –