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    Internal Audit Report

    Introduction: 

    Internal audit report includes audit findings, recommendations, and any responses or action plans from management. The contents of an internal audit report are influenced by various factors such as the nature of internal auditing, level of reporting, degree of management support and capabilities of internal audit staff. 

    Features: For preparing a good internal audit report, the following general rules may be observed. 

    1. Objectivity: To maintain the reliability of internal audit function the comments and opinions expressed in the report should be as objective and unbiased as possible. 
    1. Clarity: The language used should be simple and straight-forward. As far as possible use of technical terms and jargon should be avoided. 
    1. Accuracy: The information contained in the report, whether quantified or otherwise, should be Where approximation or assumptions have been made the fact should be clearly stated along with reasons. 
    1. Conciseness: Brevity should be omitted. 
    1. Constructiveness: Destructive criticism should carefully be avoided in the report. The report should clearly demonstrate that the internal auditor is trying to assist the auditee for effective discharge of his responsibilities. 
    1. Readability: The reader’s interest should be captured and retained throughout. 
    1. Timeliness: The report should be submitted promptly because if the time lag between the occurrence of an event and its reporting is considerable, the opportunity for taking action may be lost or a wrong decision may be taken in the absence of information. 
    1. Findings and conclusions: These may be given in the order of importance. All the facts and data pertaining to the events should be collected, reviewed and analysed. Each conclusion and opinion should normally be in line with the findings. 
    1. Statistical Data: Tables or graphs may be used for the presentation of statistical data in 
    1. Recommendations: An internal audit report shall include recommendations for improvements. In order to make the management to accept and implement the recommendations, the internal auditor should be able to explain the management that the conclusions are logical and valid and the recommendations represent effective and feasible ways of taking action. 
    1. Summary: To provide the management with a quick view of the audit conclusions, a summary of conclusions and recommendations may be given at the beginning of the report. 
    1. Supporting information: The internal auditor should supplement his report by such documents and data which adequately and convincingly support the conclusions. 
    1. Draft report: Before preparing the final report, the internal auditor should draft all the audit conclusions in the form of a report which shall be sent to the management for their comments.
    1. Review: Each draft of the report should be reviewed by a senior who should attempt to read it from the view point of view of the users of the report. 
    1. Writing and issuing the final report: The final report should be prepared and issue only when the auditor obtains the management comments. The report should be duly signed. 

    Basic Elements of Internal Audit Report: The internal audit report includes the following basic elements, 

    1. Title 
    1. Addressee
    2. Period of coverage of the report
    3. Opening or introductory paragraph
    4. Objectives paragraph
    5. Scope paragraph
    6. Observations
    7. Recommendations
    8. Managements comments
    9. Date of the report
    10. Place of signature
    11. Internal auditor’s signature 

    Follow up: It is the most significant part of an internal audit. The internal auditor should review whether follow-up action is taken by the management on the basis of his report. If no action is taken within a reasonable time he should draw the management’s attention to it. Where the management has not acted upon his suggestions or not implemented his recommendations, the internal auditor should ascertain the reasons there for. 

    Where the management has accepted his recommendations, and initiated the necessary action, the internal auditor should periodically review the manner and the extent of implementation of the recommendations and report to the management highlighting the recommendations which have not been implemented fully or partly.

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