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. What are the facts?
Is the situation described clearly and concisely?
Is the condition focused on the present or the past?
Did you quantify to identify the degree of concern?
Is the condition reported:
Factually
Completely
Accurately
Precisely
Condition Checklist
Use these questions to check your conditions
5. Criteria
The standard for
judgement of the
findings
Guides the client in
managing its
operations
Auditors must
understand the
Criteria
6. Criteria Checklist
What ought to be done?
Did you cite the policy, procedure or principle for authority?
Did you quote the criteria? (if appropriate)
7. 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
8. Cause Checklist
Does the cause answer the question why?
Does it explain why it does not agree with the criteria?
Did you distinguish between “root” and “contributing” cause?
9. Effect
Relates to the Criteria
Asks the question, what is the Criteria meant to
prevent?
10. Effect Checklist
Did you answer the question “so what?”
Does the effect convincingly explain the risks and benefits with facts?
Did you quantify:
Frequency
Size
Likelihood
12. Recommendation Checklist
Did you answer the question “what should be done?”
Does the recommendation address and eliminate the cause(s)?
Are the recommendations:
Practical
Logical
Cost effective
13. Remember
The Audit Objective is the foundation of your
Finding
Every Element must relate to the Audit Objective
14. Written Structure of Observations
You can present the elements of your observation in several ways:
Paragraph
Mapped
Outline
Table
15. Paragraph Structure
Narrative approach
Most effective when structured 1st sentence
• Cause
• Effect
Following
sentences
• Conditions
• Criteria
Separate
paragraph/list
• Recommendations
• Action plan
16. Paragraph sample
Because the patient has bronchitis, we can expect him to be sick and to require
bed rest for at least five days. Furthermore, unless properly treated, 20 percent
of such cases of bronchitis progress to pneumonia within two weeks, and
pneumonia is fatal in 15 to 20 percent of cases, depending on when treatment is
initiated. Normal breathing is free of coughing, of wheezing, and of sounds such
as rattles and gurgles; normal temperature is 98.6 degrees farenhiet. However,
this patient is coughing and wheezing and has gurgling upper respiratory sounds.
In addition, his temperature is 102.6 degrees farenheit.
Treat the patient for bronchitis by putting the patient on a course of antibiotics.
In addition, restrict his activity for five days, and monitor him for symptoms of
pneumonia.
17. Conclusion
You now have an understanding of the elements of an audit observation. Feel
free to review this lesson as often as necessary to master this skill.
Practice! Practice! Practice!
