Improving your Audit Reports and Delivering Added Value

Introduction

Writing effective audit reports must be the most important aspect of the Internal Audit process. It is the main deliverable and the only written information audit customers receive. The risk-based focus being increasingly adopted is universally accepted as the new benchmark for Internal Audit. The flip side of risk, however, is the opportunity. Specifically targeting significant areas of business opportunities in the audit program can deliver major measurable benefits to the organization whilst at the same time reducing the associated risks. This five-day course is designed to challenge your thinking about the whole approach to writing and reviewing audit reports and to understand the benefits of a focused VFM audit process and how to effectively measure the value-added.

Objectives

The aim of this program is to provide participants with:

• Simplify your reports and enhance their readability
• Significantly enhance the impact of your reports
• Make your reports easier to write, easier to review and easier for management to implement
• Improve the acceptance and implementation of your recommendations
• Reduce the lead time for their issue
• Avoid unnecessary words and phrases
• Benchmark your audit reports against worldwide best practice
• Influence management more effectively
• Apply the theory and practice of VFM auditing
• Plan VFM assignments effectively
• Develop testing plans to ensure optimum coverage
• Plan VFM pre-meetings, audit interviews, and clearance meetings with confidence
• Provide overall assurance on the VFM assignment
• Establish performance measures

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

• This course will be particularly useful for delegates that have previously attended the – Essentials of Internal Audit
• It will also be very beneficial to any auditor or other assurance professional who need to significantly improve their reports or implement value for money audits
• Personnel in other functions who need a wider understanding of the modern internal audit role and how it can add business value

Course Outline

Audit Reports

• The 5 dilemmas of audit reporting
• Video from IIA president
• What is a best practice report?
• Who do you need to convince?
• Top tips – communicating results
• The challenges of audit reporting
• Which of the 6 reports shown would you be likely to read?
• Ideas on creating impact
• How do you know a good report when you see one?
• What Management expect – a recent survey of chief executive
• IIA professional standards
• Who are the reports really for?

The 35 questions based on best practice – how did you score?

• Factors preventing the achievement of these best practice measures 30 Tips, techniques and ideas to help you score a maximum How to get 95% of recommendations implemented Use of charts and photos Dealing with minor issues Future focus Order of importance of the issues Actions rather than recommendations Action plans
• Discussion of the implications
• How to assess the needs of the audit customers Analysis of Actual Reports
• Explanation of a proven method to evaluate audit reports
• The need to determine success criteria
• Who should you involve?

Best Practice Internal Audit Reports Writing the Executive Summary

• Reflecting on the issues raised from the role-playing
• The need to cover the following issues:
  • How many key issues are there?
  • What led to control failures?
  • What did it or could it cost the business?
  • Where there any other impacts
  • Will the actions agreed to deal with the risk?
  • What confidence will this give senior management

Developing a Collaborative, Consultative Style

• The psychological problem with reports
• The need to meet and hopefully exceed management expectations
• The need to focus on benefits rather than problems 10 ways to market the audit reporting process
• An example presentation will be shared
• Relationships with management
• Expressing yourself effectively
• The need to drive action
• Creating rapport with your customers – tips and techniques
• The need to understand the people receiving the reports

Writing Reports With Impact

• Why audit reports are taken as a criticism of management
• Messages rather than content
• Outcomes rather than output
• Solutions, not problems
• Auditor and reader mind-sets
•  Ways to make the reports more positive
• Benefits and deliverables
• Conclusions
• Language and impact
• Simple and complex language
• The use of ‘power words’ in your communications
• How to get on the same wavelength as your customer
• Highlighting the issues that matter
• Audit observations
• New paper on audit observations will be shared Causes and effects

Ideas On Improving The Review Process

• The need for a positive approach
• Techniques for effective review
• Putting yourself in the position of the writer and recipient
• Avoiding the use of the ‘red pen’
• Encouraging the auditor
• Avoiding making changes for change sake
• Messages rather than content
• Outcomes rather than output

Keeping the Report as Simple As Possible the Main Report

• Keeping it simple
• The report process
• Writing the main report
• Dealing with writers’ block
• Audit objectives
• Scope
• Forming and expressing the audit opinion
• Wording tips
• Tone
• Writing effective coherent sentences and paragraphs
• The editing process – tips for success
• The power of senior management comments
• Circulation lists
• Formatting ideas
• How to avoid repeating any sections in the Executive summary
• Words and phrases to avoid
• How to reduce the number of words
• Why the spellchecker sometimes does not help you
• Dealing with the difficulties of the English language

Finalizing the Report

• Recommendations and actions plans
• Management comments
• How to reflect the right issues for the Audit Committee
• Audit Committee report examples
• The need to be on your customer's side
• Follow up audits – using the action plan
• How to get management to take responsibility for actions

What Is VFM Auditing?

• How does it differ from other audit approaches?
• VFM questions
  • Does your internal audit function add measurable value to your organization?
  • Do you specifically evaluate and report this added value?
  • Are you happy with this process?
  • Do you measure the value of monetary savings made as a direct result of your audits?
  • Have these savings been at least double the cost of your function in each of the past 2 years?
  • Are these savings known to and recognized by management?
  • Does your audit program target areas of opportunity as well as a risk?
  • Do you carry out any specific value for money audits?
  • Do VFM assignments account for more than 5% of the annual work program?
• How did you score on the questions?
• The relationship between VFM and other types of audit
• The benefits of VFM auditing
• Other outcomes
• The associated dangers e.g. trying to quantify non-quantifiable savings

Key Steps In Completing A VFM Review

• How to select VFM topics
• The research phase
• Objectives, methodology, and techniques
• Establishing terms of reference
• Defining the boundaries of the review
• Gathering of information
• Evaluation of data and effectiveness of management Processes
• Evaluation of performance and cost-saving potential

Identifying Over-Managed Risks

• Risks can be over-managed as well as under-managed
• Low-level residual risks can be opportunities
• Fruitful areas for review
• Using an opportunity matrix
•  Red hot opportunities
• Hot and warm opportunities
• Very quick and quick wins
• Cool and cold opportunities
• Prioritizing the actions to deal with over-managed risks Linking the heat of the action with the potential to reduce the risk
• Measuring the risk reduction achieved
• The Opportunity register
• Helping management to focus on opportunities

Choosing the VFM Audit

• Risk and opportunity approach
•  VFM audits should be prioritized as other audits
• Most common VFM topics
  • Travel management
  • Mobile communications
  • Insurance Stationery
  • Energy management
  • Budgeting
  • Meetings management
  • Office furniture

Performance Measures

• How to determine performance measures
• Good KPI’s
• SMART measures
• Auditing performance measures
• Audit program