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Part II Sec D, 4) Recommendations to Enhance and Protect Org Value, 5)…
Part II Sec D
4) Recommendations to Enhance
and Protect Org Value
Guidance for recommendation:
based on observations and conclusions
call for action to correct/
suggest approaches to correcting/ enhancing perf
general or specific
may suggest further investigation or study
Effective approach to
develop recommendation: (SMART)
Specific - outline wt to accomplish
Measurable - measure the accomplishment
Action-oriented - specify action
Relevant -
Time-based - specify timeframe
IA consideration:
objectivity
should maintain
when drawing conclusion/recommendation
if impairment -> disclosed to mgt immediately
consider
the cost
vs recommended action
and
the benefit
to the org
Give Managers Credit for Managing
Recommendations are not commands
mgr has a broader view of
of the possible consequences
-> discussion before the end
of the audit - superiors
->working jointly with the mgr
to come to agreement
Comm the result with mgt
obtains agreement on the results of the engagement/ plan of action to improve operations
if not agree, state both positions and the reasons
-> mgt comments may be included as
an appendix to the report;
in the body of the report; or
in a cover letter
5) Audit Engagement Comm
and Reporting Process
a) Holding the
Exit Conference
Objective:
Discussing conclusions and recommendations
Resolving any misunderstandings
Reaching agreement on possible solutions
Expressing appreciation for cooperation
Logistic
Ensure that the right people attend
Provide the necessary doc
Set the agenda
Explore and resolve as many issues as possible
Provide clear messages
Thank the audit customer for cooperation
post-meeting debriefing with the audit team
b) Developing
Audit Report
Drafting
(outline, 1st, 2nd, 3rd drafts)
keep the needs of the
audience in mind
needs to be a timely endeavor
Reviewing (by supervisor, audit clients)
consider sensitive content
improve grammar and style
review for proper tone
the report is factually correct, complete,
conclusions supported by evi -
sufficient, reliable, relevant, and useful
Approving
CAE
review and approve the final engagement comm
before it is issued
decide who should receive
signs the final report before distribution
-> commitment to the quality of audit work
Distributing
CAE
to whom
ensure that the results are given due consideration
(take corrective action)
external auditors, the board, and others who are affected
substantive corrections after distributed
-> issue a new report that highlights the changes
-> distributed to all recipients of the original report
Before releasing reports to parties outside
-> assess potential risks to the org
-> obtain approval of senior mgt, legal counsel
c) Obtaining Mgt’s Response
consider any discussions and interim comm they
have had with the mgt of the area under review
-> clear up misunderstandings ?
1) Preliminary Comm
with Engagement Clients
Initial client meeting (Kickoff)
Identify key contacts and their availability
Doc and records needed
Security clearances
Complexity of operations to be examined
Preferred comm methods
Access to necessary facilities
sets the tone for the upcoming audit
-> start of a productive and cooperative relationship
can encourage positive, open comm
manage the expectations of audit team and client
request specific assistance from client
meeting arrangement should be in advance
-> an agenda is recommended
2) Comm Elements
and quality
a) Report Elements
Obj
Scope
Audit Methods
Results
Audit Opinion
Bg info
Summaries
Client accomplishment
Client views
b) Quality report
accurate, obj, clear, concise,
constructive, complete, timely
Characteristics of an effective report
easily understood and followed
clarity
conciseness
a constructive tone
good mechanics
3) Interim Reporting on
Engagement Progress
Interim report
comm info require immediate attention
change in engagem scope/
info mgt extend over a period
+ve
efficient
issue uncovered early -> impact on schedule
effective
relevant info is uncovered before
evaluated and recommendations formulated
strengthen auditor-client relationship
Effect to final report/ engagem comm
does not diminish/ eliminate final engagem comm
-> path to higher-quality final reports, more client
buy-in to observation and recommendation
finding in interim report may be
excluded in final report
-> if properly resolved/ no longer
importance to client's operation
Communicating Engagement Results
and Monitoring Progress
comm if there are deviation to
planned scope, obj, final results
doc info (workpapers) supports
the engagement
results and conclusions
-> relevant and sufficient