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Writing effective audit observations lo1 ppt
- 1. Writing Effective Audit Observations By: Brendalee Smith
- 2. Findings Findings are the results of the audit They must be organized in a format to be useful Elements of the observation are findings There are five elements: 1. Criteria 2. Condition 3. Effect 4. Cause 5. Recommendation
- 3. Condition Conditions are identified through the audit work Ask the following: 1. What is the Criteria? 2. Was it followed? If yes, conclude the audit If no, you now have audit findings… i. collect the audit evidence ii. pursue the findings
- 4. Criteria The standard for judgement of the findings Guides the client in managing its operations Auditors must understand the Criteria
- 5. Effect Relates to the Criteria Asks the question, what is the Criteria meant to prevent?
- 6. Cause Always relates to the Criteria Can be one of several reasons: The employee didn’t follow the criteria. Example: “I didn’t know” The employee knew but thought it meant something else The employee knew but ignored it Related to the Criteria Ask Management and the staff about the cause The Cause is a sign of an internal control weakness
- 7. Recommendation Usually affects the Cause but could also address Conditions, Effects or Criteria
- 8. Remember The Audit Objective is the foundation of your Finding Every Element must relate to the Audit Objective