Question

DQ1 What relevant article informs about challenges faced by internal auditors in communicating the results of an audit or consulting engagement.

-What was interesting?  

- What do you agree or disagree with?  

-Why is this information relevant?

-Are there other points of view? What are the pros and cons?

DQ2. Should individual audit findings be risk ranked? Why or why not? If yes, what are the typical rankings used? Do you recommend including an overall ‘Audit Opinion’ in the Audit Report? Why or why not?

DQ3. What are the implications for internal auditing if management fails to respond appropriately to an observation warranting corrective action?

DQ4. Some internal audit departments are moving away from the traditional audit report format. What are some of the different report formats being used by internal auditors? What are some of the advantages and disadvantages of each?

Answer 1

1. The Internal audit report generally should be divided into two parts. The first part is the Executive Summary and (b) The second part is the Detailed Report.

2. The Executive summary should be brief and would be mentioning the actionable points and (b) The detailed reports would cover the others. Hence in this sense, it is a challenge to decide what is to be covered in the Executive summary and what is to be covered in the detailed reports.

3. Generally issues like (a) High Risk areas (b) Influences of Political Risk, Currency Risk and Economic & Regulatory risks are Interesting areas from Management Perspective and hence to be included. (c ) Another Risk Area is the Competitor & Market Environment Risks. (d) Other Interesting areas are Control issues in the Organisation (e) Information Flow (f) Finance fund flow position.

4. The pros is that factually points would be eye opener for the Stakeholders and the cons could be these points are hard-hitting sometimes and the Management should learn to take these in its stride.

DQ2 : Individual Audit Risks should be ranked and the format of Ranking should be (a) High Risk (b) Moderate Risk (c) Low Risk. Rankings are necessary since the respective stakeholders could know their importance and emphasis and timely corrective action could be taken.

Audit Opinion : The auditor must state his opinion about the state of affairs / state of accounts whether it is positive or negative. In case of too messy / ambiguous situations where the auditor is unable to express any opinion, he can issue a "DISCLAIMER" Report. An Audit opinion gives comfort to the Management and hence it is compulsory to issue an audit opinion.

DQ3: An Internal Auditor is appointed by the Management and he reports to the Management for improvement in business / internal controls or it can be any areas. If Implementation is not done, the whole purpose of Internal Audit is defeated.

DQ4: DIFFERENT FORMATS OF INTERNAL AUDIT REPORTS ARE :

A. EXECUTIVE SUMMARY & DETAILED REPORT : Advantages are at one glance you know all the points

B. KEY CONTROLS & FINDINGS : Advantages are it is more systematic & organised.

C. SCOPE OBSERVATIONS & RECOMMENDATIONS FOR IMPROVEMENT : Advantages are it provides ready made solutions.

D. AUDIT REPORT INCLUDING VALUE ADDITIONS : Advantages it shows value additions.