PRESENTATION ON

INTERNAL AUDIT REPORT WRITING

PART I
ORGANISED BY
CA ALLAHABAD BRANCH

ON
MAY 19, 2012
AT
HOTEL KANHA SHYAM
ALLAHABAD
Presented by:
CA Verendra Kalra
 Introduction
What is an Audit Report?
• An audit report is a formal document where internal audit
summarises its work on an audit and reports its findings and
recommendations based on that work.
• The Auditor's report is provided as an assurance service in order
for the user to make decisions based on the results of the audit.

An audit report apart from disclosing the findings about the auditee
also helps the users to evaluate the performance of the auditors
themselves. More often than not, the report becomes a statement
of the auditor’s credibility when they are circulated, referred to and
implemented.
It is a major factor by which the reputation of internal audit
department is established.

INTERNAL AUDIT REPORT WRITING PART I 2

 Introduction
An Internal audit report is basically a four step process comprising
of:
What is wrong?
• Disclosure of findings and processess involved in arriving at
such finding.
Why is it wrong?
• Description of findings-the root cause analysis.
How to correct it?
• Recommendations and Suggestions.
What will be done?
• Auditee's views and comments.

INTERNAL AUDIT REPORT WRITING PART I 3

 Introduction
An Internal audit report should have the following features:
Present findings both favourable and
Disclose unfavorable in a concise manner so that the
findings: auditee is apprised of the situation in an
operation/ segment.
Adverse findings should be described in detail. It
could be internal control weakness, gaps,
Description of violations of procedures or any other audit
findings: concern. Each finding must be provable. Auditor
beliefs, without proper documentation will not
be carried to the report.

INTERNAL AUDIT REPORT WRITING PART I 4

 Introduction
An Internal audit report should have the following features:
Suggestions The auditor should make suggestions for
and prevention or correction of the deficiencies or
Recommendat gaps identified.
ions:
The auditee may wish to provide clarifications on
any of the issues reported or state the constraints
Auditee’s
or mitigating circumstances or what corrective
Comments:
action the auditee has initiated or proposes to
initiate.

INTERNAL AUDIT REPORT WRITING PART I 5

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
Compliance with relevant standards on Internal Audit issued by ICAI:
• Standard on Internal Audit (SIA) 4, “Reporting” states that the
internal audit report:
o contains the observations and comments of the auditor,
o presents the audit findings, and
o discusses recommendations for improvements.

• It further states that the auditor’s report should contain a clear

written expression of significant observations,
suggestions/recommendations based on the policies, processes,
risks, controls and transaction processing taken as a whole and
managements’ responses.
INTERNAL AUDIT REPORT WRITING PART I 6
 Compliance with relevant
standards on Internal Audit issued
by ICAI:
• Standard on Internal Audit (SIA) 9, “Communication with
Management” states that different stages of communication and
discussion should be as under:
o Discussion Draft: At the conclusion of fieldwork, the auditor
should draft the report and present it to the entity’s
management for auditee’s comments.
o Exit Meeting: The auditor should discuss with the
management the findings, observations, recommendations,
and text of draft and obtain their comment on the draft,
achieve consensus and reach an agreement on the audit
findings.
INTERNAL AUDIT REPORT WRITING PART I 7
 Compliance with relevant
standards on Internal Audit issued
by ICAI:
o Formal Draft: The auditor should prepare a formal draft, in
view of the outcome of the exit meeting and other
discussions. Upon review of such changes by the auditor and
the management, the final report should be issued.
o Final Report: The report should be submitted to the
appointing authority or such members of management, as
directed.

INTERNAL AUDIT REPORT WRITING PART I 8

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
• Standard on Internal Audit (SIA) 2, “Basic Principles Governing
Internal Audit” states that:

o The auditor should carefully review and assess the

conclusions drawn from the audit evidence obtained, as the
basis for his findings contained in his report and suggest
remedial action.

INTERNAL AUDIT REPORT WRITING PART I 9

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
• Standard on Internal Audit (SIA) 8, “Terms of Internal Audit
Engagement” states that:
o Confidentiality of the Report: The engagement letter should
contain a condition that the report of the auditor should not
be distributed or circulated by the auditee or the auditor to
any party other than that mutually agreed between the
auditor and the auditee unless there is a statutory or a
regulatory requirement to do so.
o Limitations: The terms of engagement should specify clearly
the limitations on scope, coverage and reporting requirement,
if any.

INTERNAL AUDIT REPORT WRITING PART I 10

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
• Standard on Internal Audit (SIA) 12, Internal Control Evaluations
states that:

o The auditor should make management aware, as soon as

practical and at an appropriate level of responsibility, of
material weaknesses in the design or operation of the internal
control systems, which have come to his attention.
o The communication of material weaknesses to management
would ordinarily be in writing, as part of the internal audit
report.

INTERNAL AUDIT REPORT WRITING PART I 11

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
• Standard on Internal Audit (SIA) 12, Internal Control Evaluations
states that:

o The auditor should make management aware, as soon as

practical and at an appropriate level of responsibility, of
material weaknesses in the design or operation of the internal
control systems, which have come to his attention.
o The communication of material weaknesses to management
would ordinarily be in writing, as part of the internal audit
report.

INTERNAL AUDIT REPORT WRITING PART I 12

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
o Report should also specify that only weaknesses which have
come to attention as a result of the audit have been reported
and that examination has not been designed to determine the
adequacy of internal control for management purposes.
o The auditor in his report to the management, should provide:
 A description of the significant deficiency or material
weakness in internal control.
His opinion on the possible effect of such weakness on the
entity’s control environment.

INTERNAL AUDIT REPORT WRITING PART I 13

 Compliance with relevant
standards on Internal Audit issued
by ICAI:
o Similarly If the auditor is precluded by management or those
charged with governance from obtaining sufficient appropriate
audit evidence to evaluate whether non-compliance that may be
significant to the functioning of the entity has, or is likely to have,
occurred, the auditor should report the same in accordance with
SIA 4, “Reporting”.

INTERNAL AUDIT REPORT WRITING PART I 14

Types of Audit report

Interim
Oral (Informal)
Report Report

Descriptive Summary
Audit Audit
Report Report

INTERNAL AUDIT REPORT WRITING PART I 15

 Types of Audit report
An Internal audit report should have the following features:

• Such reports should only be supplementary and

not a substitute to written reports.
• This mode might be used for reporting findings
requiring emergency action; or as an oral
Oral
presentation; or as a prelude to the formal written
Reports
report.
• As per SIA 9 the auditor should document all oral
communications also recording to whom such
communication was made.

INTERNAL AUDIT REPORT WRITING PART I 16

 Types of Audit report
An Internal audit report should have the following features:

• Such reports are issued when the management has

to be informed of significant event or problems
Interim requiring prompt action.
(Informal) • Sometimes it is used to record the discussions in an
Reports oral presentation.
• The content of such a report is eventually included
in the final report.
• In most audit assignments a detailed regular report
is given at the conclusion of audit.
Descriptive
• The form and content may vary with different type
Reports
of assignments, functions or as may be mandated
by the auditee.

INTERNAL AUDIT REPORT WRITING PART I 17

Audit report Users: Internal Users
Audit reports must meet the varying information needs of its users:
Addressee of report:
• The Final Report should always be addressed to a person one
level above the auditee or as mandated by the appointing
authority.
• The additional copies or CC may be marked to persons in the
distribution list as finalized at the time of engagement or as
mandated by the appointing authority.
• Draft reports may be addressed directly to the auditee level for
obtaining their response.
Confidentiality:
• Hard copies: The report should be marked strictly confidential,
and should be circulated in sealed envelopes, only to the persons
mentioned in the distribution list.

INTERNAL AUDIT REPORT WRITING PART I 18

Audit report Users: Internal Users
• Soft copies: To ensure transparency and visibility, a single mail
should preferably be sent with CC to persons in distribution list,
instead of sending individual mails to each such recipient.

INTERNAL AUDIT REPORT WRITING PART I 19

Audit report Users: External Users
There can be external users of the Internal Audit Report also.
Standard on Internal Audit (SIA) 8, “Terms of Internal Audit
Engagement” states that:

“When the auditor has a specific responsibility, arising out of law or

a regulation or a professional standard applicable to the auditor, to
communicate directly to an appropriate authority……. or a regulator,
the terms of engagement should contain a clear mention of such
responsibility.”

INTERNAL AUDIT REPORT WRITING PART I 20

 Essentials of a Report
The report should be
Accurate Free from errors and distortions and faithful to the
underlying facts.
Objective Fair, impartial, and unbiased and is a result of a fair
minded and balanced assessment of all relevant facts
and circumstances.
Clear Easily understood and logical, avoiding unnecessary
technical language and providing all significant and
relevant information.
Concise To the point, avoid unnecessary elaboration,
superfluous detail, redundancy, repetitiveness and
wordiness.

INTERNAL AUDIT REPORT WRITING PART I 21

 Essentials of a Report
Constructive Helpful to the engagement client and the
organization and leads to improvements where
needed.
Complete Lacking nothing that is essential to the target
audience and includes all significant and relevant
information and observations to support
recommendations and conclusions.
Timely Opportune and expedient, depending on the
significance of the issue, allowing management to
take appropriate corrective action.

INTERNAL AUDIT REPORT WRITING PART I 22

 Stages in Report Writing
The audit report is a process in itself, which starts with:

Identification of audit findings

Preparation of first draft report

Discussions draft

Exit meeting & Formal Draft

Final Report

INTERNAL AUDIT REPORT WRITING PART I 23

 Planning Revising

Drafting
Begin with the end in mind.”

Analyse the audience

Who will be the most important reader of the report?
How much do they know about the subject?
How do they plan on using the report?
How interested are they in the report?
What’s their reaction going to be to the report’s message.

INTERNAL AUDIT REPORT WRITING PART I 24

 Planning Revising

Drafting

Use a Top Down Approch

Use a heading that would accurately summarise the report’s
message.
Write a summary paragraph that summarises the report’s key
points.

INTERNAL AUDIT REPORT WRITING PART I 25

Write paragraphs that explain and provide evidence for the
statements made in the summary paragraph.

INTERNAL AUDIT REPORT WRITING PART I 26

Stages in Report Writing: Drafting
Writing an effective audit reports will require that the report should
be attention-getting, readable and credible.The art of report writing
can be segregated into three major sections :
Report Design Writing Style Report Content
Effective Report design has two components:
Visual Appeal Reading Efficiency
There is always a competition for reader’s attention and time. Once
attention is captured, writing style and content should be able to
maintain this attention.

Writing Style generally consists of the following:

Tone Vocabulary Syntax Grammer
For audit report purposes, style is defined as the manner in which
the content is written.

INTERNAL AUDIT REPORT WRITING PART I 27

Stages in Report Writing: Drafting
Visual Report should look professional; be easy to read and
Appeal develop a positive feeling.
Reading Report should not appear long, dull and tedious.
Efficiency
Design Give special attention to type size & style; Line length
Techniques when drafting.
Use standard format, bullets, white space, Page Nos.,
headers and footers.
Format Fonts and formatting can vary from organisation to
organisation, but it must be consistent within the
organisation.

INTERNAL AUDIT REPORT WRITING PART I 28

Stages in Report Writing: Drafting
Tone Avoid biased and emotionally charged, subjective
language. Always maintain objectivity.
Terminology Use consistent terminology, avoid interchangeable
terms (e.g. objective and goal).
Sentence In editing reports, try to look closely at sentences
Length with more than 20 words. Eliminate Empty words;
Overstated Language; Filler phrases; Repetitions.
Active Voice Use the active voice because it clearly identifies who
is responsible.
Stereotypes Avoid referring to men and women, the principles of
equality must be used.

INTERNAL AUDIT REPORT WRITING PART I 29

Stages in Report Writing: Drafting
Quotation Use when possible briefly, in parentheses, or more
completely, in a footnote.
Grammar Adequate care must be taking to avoid common
grammatical errors.

INTERNAL AUDIT REPORT WRITING PART I 30

Stages in Report Writing: Revising
Report Level : Is the central message of the report clear and
does the report have:
• An appropriate length (Is it too short or too long)?
• A clear summary of the report up front?
• Sufficient and clear headings?
• Suitable graphics such as tables,charts pictures etc.?
Paragraph Level : Does the paragraph contain
• A topic sentence that accurately conveys the paragraph’s
central idea?
• Enough information to support the idea expressed in the
topic sentence?
• Too much information so that it will overwhelm the reader?

INTERNAL AUDIT REPORT WRITING PART I 31

Stages in Report Writing: Revising
• Ideas presented in the sentences flow logically (i.e., are they
in the correct order)?
Sentence Level :
Are all the words in my sentences necessary?
Are my sentences easy to understand?
Do the sentences contain action verbs and actors (active vs.
passive construction)?

INTERNAL AUDIT REPORT WRITING PART I 32

 Audit report structure

• Title should be brief and definitive and clearly

Title
express the nature of report.
• It is desirable to have a covering letter written
Covering and signed by the partner and made a part of
Letter the audit report. It should be as brief as
possible.

INTERNAL AUDIT REPORT WRITING PART I 33

 Audit report structure

• Report should always be addressed to person

one level above the auditee.
• Draft report however should always be
Addressee
addressed to the auditee at the operational
level or to the person responsible for providing
auditee comments.

INTERNAL AUDIT REPORT WRITING PART I 34

 Audit report structure

• Report should list and mention the "intended

recipients" of the report.
Report
• This list will be initially defined in the
Distribution
List engagement letter and may subsequently be
updated on the basis of input provided by the
management.
Restriction on • Report should state that it is to be used for
Use intended purpose only.

INTERNAL AUDIT REPORT WRITING PART I 35

 Audit report structure

• There should be clear mention of "period

Period/timing covered" under audit.
of Coverage • It should mention when the audit was
performed and also the locations visited.

INTERNAL AUDIT REPORT WRITING PART I 36

 Audit Report Structure
Procedures • Audit procedures performed to arrive at findings
should be mentioned.
• The procedures used to arrive at audit findings and
conclusions may be explained in brief or descriptive
(in case some special procedures have been
adopted).

INTERNAL AUDIT REPORT WRITING PART I 37

 Audit Report Structure

Staff • Report should contain the details of the staff

Deployed & involved in carrying out the audit.
Skills • The professional qualification and specialization
should also be mentioned.
• The number of man hours (or time) spent by each
in the audit should be given.

INTERNAL AUDIT REPORT WRITING PART I 38

 Audit Report Structure

Dates • The auditor should mention in the Report, the dates

timeline of :
⁻ Discussion draft,
⁻ Exit meeting,
⁻ Formal draft and
⁻ Final report.

INTERNAL AUDIT REPORT WRITING PART I 39

 Audit report structure
• Report should identify the type of engagement
Nature of (i.e. regular, special etc.).
audit • Report may provide background information
Assignment necessary about systems, processes and the
functions audited.
Objectives • Objectives should be clear and concise and
should correspond to audit conclusions.
• Objectives stated in the report should be same
as those appearing in the detailed audit
programme.
INTERNAL AUDIT REPORT WRITING PART I 40
 Audit report structure
Scope • The scope should be communicated clearly. This
section should describe the depth and coverage
of audit work conducted to accomplish the
audit's objectives.
• It should include any significant information that
the reader would need to know, such as a
departure from procedures, data limitations,
scope impairments or clarification of work
performed.

INTERNAL AUDIT REPORT WRITING PART I 41

 Audit report structure

Limitation • When there is a limitation on the scope, the report

should describe the limitation

INTERNAL AUDIT REPORT WRITING PART I 42

 Audit report structure
Executive • This section should contain summary of key findings,
Summary observations and recommendations for the benefit of
the top management.
Observations, • The report should clearly mention the process name;
Findings significant observation and findings with respect to the
Recommenda
criteria; analysis of the consequences of the findings;
tions
and recommendations of the auditor.
• Each observation should be supported by a set of
facts.
• Always give management a business reason for
implementing recommendations.
INTERNAL AUDIT REPORT WRITING PART I 43
 Audit report structure
Auditee’s • All recommendations should be followed by the
response
auditee's response.
• Responses should be included verbatim.
Auditor’s • These comments are used as necessary to
Comments
further evaluate the adequacy of the auditee's
written responses.

INTERNAL AUDIT REPORT WRITING PART I 44

 Audit report structure

General • This section is reserved for points of interest that are

Comments
of lesser magnitude than findings, but of interest to
operational management.
• Written responses from the auditee are not required
for general items.

INTERNAL AUDIT REPORT WRITING PART I 45

 Audit report structure
Follow up • This section contains the status of corrective action
taken or proposed corrective actions and or
compliance of previous internal audit observations
already taken or being taken, also action not taken
and reasons thereof.
• Revised timelines of open items and fixation of
responsibility of concerned persons

INTERNAL AUDIT REPORT WRITING PART I 46

 Audit report structure
Date & • It should contain the date on which the auditor signs
Place of
the report expressing his comments and
signing
observations.
• Specify location (generally the city where report is
signed).
Internal • Report should be signed in personal name and
Auditor's
membership number also to be mentioned.
Signature

INTERNAL AUDIT REPORT WRITING PART I 47

 5 Cs in Report Writing
The five primary components of an audit observation are:

Criteria

Corrective
Conditions
Action plans

Consequence Causes

INTERNAL AUDIT REPORT WRITING PART I 48

 5 Cs in Report Writing
• Observations and Recommendations in report writing emerge by a
process of comparing criteria (the correct state) with condition
(the current state).
The report should specify the following:
Criteria These are the standards or measures used in making an
evaluation and/or verification (The correct state).
Conditi It is the factual evidence that the auditor found in the
on course of the examination (The current state).
Causes The reasons for difference between expected and

actual conditions.

INTERNAL AUDIT REPORT WRITING PART I 49

 5 Cs in Report Writing
• Observations and Recommendations in report writing emerge by a
process of comparing criteria (the correct state) with condition
(the current state).
Conseque The risk or exposure the organization and/or others
nce
encounter because the condition is not consistent
with the criteria (the impact of the difference).
Corrective It refers to action recommended/suggested to
Action
correct existing conditions or improve operations
and may include suggestion for correcting or
enhancing performance as a guide for management

INTERNAL AUDIT REPORT WRITING PART I 50

5 Cs in Report Writing: Case Study
Criteria Variation in stock on physical verification with the balance as reflected in the stock
register should be NIL.
Condition The stock physically verified was short by 2 units as against the balance shown in the
stock register.
Causes Issues made during the night shift were not recorded.
Consequence The stock position in the books is overstated and possibility of stock pilferage is high
due to lack of control.
Corrective Night shift stock keeper needs to be appointed. Alternatively, the requirement of stock
Action for the night shift should be issued at day end as per the requisition of the production
in charge for the night shift. The consumption during night shift is verified by counting
in the morning the balance stock left out of the lot issued to the floor during the
previous days close.

INTERNAL AUDIT REPORT WRITING PART I 51

 Providing Assurances
• An opinion is best expressed when using a defined criteria and
evaluation structure.
• There are two different types of opinions, positive assurance
and negative assurance.
• Positive assurance implies a lot of responsibility and should be
used with caution and consideration. A positive assurance
opinion requires the highest level of evidence.
• A positive assurance should not be given unless the auditor has
been mandated to do so and the auditor’s scope encompasses
such assurance. Such assurance is supported by adequate,
competent evidence in accordance with prescribed standards.
• Increased precision in the information provided in an opinion
increases the amount of evidence needed to support the
opinion.

INTERNAL AUDIT REPORT WRITING PART I 52

Use of grades/ rating in providing
assurances
• Variations in expressing a positive assurance opinion may
include the use of grade such as:
Color coding (such as red yellow green) Grading scale (such
as 1 to 4)
• Use of ratings is generally done for individual audit assignment
at micro level and the rating process is applied in relation to
individual audit findings.
• Grades used should be agreed-upon and commonly
understood within the organization.

INTERNAL AUDIT REPORT WRITING PART I 53

Use of grades/ rating in providing
assurances
• Ideally, prior recommendations should also be included. When
using a grading system to communicate a positive assurance
opinion, care must be taken with wording, particularly with
when using words such as adequate or inadequate.
• Wording should be clear and appropriately defined for the
reader.Avoid using general terms such as satisfactory, effective,
or unsatisfactory unless appropriately defined.

INTERNAL AUDIT REPORT WRITING PART I 54

 Use of grades and rating in
providing assurances
• The organization needs to have a clear, common understanding
of these terms and what constitutes an acceptable level of
performance, all of which require a frame of reference.
• For example, the term “effective” refers to controls being
effective both in design and in operation. The opinion needs to
indicate whether both meanings are included.
• In preparing the report ensure that all technical terms (e.g.,
material weakness) are clearly defined for the reader.Use of a
grading scale requires a well-defined evaluation structure.

INTERNAL AUDIT REPORT WRITING PART I 55

 Use of grades and rating in
providing assurances
• Grading sysytem should have the quality of consistency and
sustainability. Gradings that change too frequently can be
confusing to stakeholders and may impact comparability and
clarity of reporting across the organization.
• Care should also be taken not to form opinions based on
isolated instances but to identify a pattern of repeated
instances even if of insignificant value.

INTERNAL AUDIT REPORT WRITING PART I 56

 Use of grades and rating in
providing assurances
• 4 Tier Grading System ( An illustration):
Grade Used Remarks
Effective Controls evaluated are adequate, appropriate, and
effective to provide reasonable assurance that risks are
being managed and objectives should be met.

Some A few specific control weaknesses were noted;

Improvement However, controls evaluated are adequate,
Needed appropriate, and effective to provide reasonable
assurance that risks are being managed and objectives
should be met.
INTERNAL AUDIT REPORT WRITING PART I 57
 Use of grades and rating in
providing assurances
• 4 Tier Grading System ( An illustration):
Grade Used Remarks
Major Numerous specific control weaknesses were
Improvement noted.
Needed Controls evaluated are unlikely to provide
reasonable assurance that risks are being managed
and objectives should be met.

INTERNAL AUDIT REPORT WRITING PART I 58

 Use of grades and rating in
providing assurances
• 4 Tier Grading System ( An illustration):

Grade Used Remarks

Unsatisfactory Controls evaluated are not adequate, appropriate,
or effective to provide reasonable assurance that
risks are being managed and objectives should be
met.

INTERNAL AUDIT REPORT WRITING PART I 59

 Use of grades and rating in
providing assurances
• Risk Rating Opinion: Deficiency Risk Rating in Relation to Audit
Findings (Micro Level)
Risk Rate
Used
High Immediate management attention is required. This is
Priority a serious internal control or risk management issue
Risk that if not mitigated, may, with a high degree of
certainty,lead to:
Substantial losses;Serious violation of corporate
strategies,policies,or values; Significant adverse
60
regulatoryINTERNAL AUDIT REPORT WRITING PART I
impact,such as loss of operating
 Use of grades and rating in
providing assurances
• Risk Rating Opinion: Deficiency Risk Rating in Relation to Audit
Findings (Micro Level)
Risk Rate
Used
Substantial losses;Serious violation of corporate
strategies,policies,or values; Significant adverse
regulatory impact,such as loss of operating
licenses/material fines.

INTERNAL AUDIT REPORT WRITING PART I 61

 Use of grades and rating in
providing assurances
• Risk Rating Opinion: Deficiency Risk Rating in Relation to Audit
Findings (Micro Level)
Risk Rate
Used
Medium As this is a medium-priority issue, timely management
Risk attention is warranted. This is an internal control or
risk management issue that could lead to: Loss of
controls; Reputation damage; Adverse regulatory
impact such as immaterial fines.

INTERNAL AUDIT REPORT WRITING PART I 62

 Use of grades and rating in
providing assurances
• Risk Rating Opinion: Deficiency Risk Rating in Relation to Audit
Findings (Micro Level)
Risk Rate
Used
Low Risk As this is a low priority issue, routine management
attention is warranted. This is an internal control or
risk management issue, the solution to which may lead
to improvement in the quality and/or efficiency of the
organizational entity or process being audited. Risks
are limited.
INTERNAL AUDIT REPORT WRITING PART I 63
 Follow Up
• Once a final report has been issued ,the auditor should schedule
a follow up review to ensure that needed actions based on the
audit recommendations have been taken.
• Standard on Internal Audit (SIA) 3, Documentation, states that:
o The internal audit documentation should cover all important
aspects of an engagement such as review of the findings,
communication and reporting and follow up.
o The internal audit documentation would, therefore,
generally, include records as to the follow up on the
recommendations/ findings.

INTERNAL AUDIT REPORT WRITING PART I 64

 Follow Up
• Follow up’s nature, timing, and extent should to be based on the
scope of engagement.
• Though such a follow up is desireable it often falls on a line of
conflict raising question as to whether such a follow up will
convert the role of the internal auditor into a policeman from
that of a local management partner.
• Thus it is suggested that the auditor should play only a limited
specific role after the final audit report has been issued.

INTERNAL AUDIT REPORT WRITING PART I 65

 Concluding Remarks
The success of audit reporting is determined largely by the attitude
and approach with which internal auditor carries out his duties. As
auditors, we should aspire to be the agents of positive change in
the organization, and strive to be viewed and accepted as valued
insiders.
Internal audit is not an isolated technical exercise but is an integral
part of the corporate governance process and the report which is
the culmination of the audit process has far reaching consequences
in changing the way the business is done and risks are managed.
The internal auditor has to not only possess adequate knowledge
of the business he is auditing but also internalise that he is part of
the management and his audit objective is aligned to the business
objective and goals.

INTERNAL AUDIT REPORT WRITING PART I 66

 Concluding Remarks
A report is a reflection of the auditor’s mindset and is only as good
as the approach with which the audit has been done. No amount of
add ons by way of style and presentation can mask the inadequacy
of the auditor’s performance.

INTERNAL AUDIT REPORT WRITING PART I 67

INTERNAL AUDIT REPORT WRITING PART I 68
INTERNAL AUDIT REPORT WRITING PART I 69