In this episode of THE SAMPLE, Leita Hart-Fanta, CPA answers the question, “What Goes in Audit Findings?”
Welcome to The Sample, a quick discussion of auditing concepts and terms that will help you do your work. Conducting an audit in accordance with auditing standards is no small feat and I want to support you. We’ll be referring to the GAO, IIA and AICPA literature to bolster our conversations. Let’s get started.
In this episode, we answer the question, “What goes in audit findings?”
Well, the IIA (the Institute of Internal Auditors), the GAO (Government Accountability Office and The Yellow Book), and the single audit requirements in The Uniform Guidance ask that you answer five basic questions for the reader. Maybe I should say six because there’s two recommendations, as I will show you in a minute.
The condition answers the question, “What’s going on here; what’s the problem?”
The effect sells the finding; it makes people care about what they’re reading.
The cause answers the question, “Why (or how) did this condition occur?”
The criteria refers to an authoritative document, like a law / regulation / contract / grant / agreement, where it’s clearly spelled out, “We hope that this condition is not acceptable.”
And then we have two recommendations: one that resolves the condition, and one that resolves the cause, because we brought up two problems.
Here’s an example of a finding. It’s not in full sentences, and I’m going to let you read that while I tell you something else.
The cause is by far the hardest element to come up with and not be redundant with the condition. The effect is probably the second hardest.
And each of these elements needs to be backed up with evidence, with a working paper. So, that makes findings relatively challenging to develop.
You might want to add this also. You might want to quantify. I do recommend that you quantify. Usually, that goes in the effect or condition statement. The purpose of that is to give the reader a sense of how big a deal this finding is. Like, is this a little deal, or is this a big deal? Does it impact a lot of people? Does it involve a lot of money?
If you’re following the single audit requirements, you also need to include sampling information. This a good idea for everybody, but it’d be nice for the reader to be able to look at your work, and say, “Well, what was the population? What was the size of your sample? What are the results?” And if you did a statistical sample only, you can extract that to the population.
That wraps it up for another episode of The Sample. True to the nature of a sample, we didn’t talk about everything, so you’ve probably got questions. Write to me email@example.com and I’ll do my best to fill in the blanks. Thanks for playing.
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