Parity Twinomujuni CIA
Makerere University
Internal Audit Department
 Challenges
with Internal audit
reports
 Consumers of internal audit
reports
 Report structure
 Guidance for efficient reporting
2400 – Communicating Results
Internal auditors must
communicate the engagement
results.
This communication is usually in
form of audit reports
Scoping is often not formally
communicated to Auditees
 Reports are too voluminous and
complex and in some cases too
short
 Time taken to publish reports –
completion of fieldwork to reporting
 Reports that are not supported by
evidence

 Drafting
/ sometimes English –
too much jargon
 Over emphasis of issues
 Personalizing reports
 Negative language
 Poor flow – non critical issues
emphasized and critical issues
left out etc
◦ Who reads our reports? Mgt, Audit
Committee, Other stakeholders,
◦ What are their uses of the report?
◦ What kind of message do they seek?
◦ How can we ensure that our reports
are actionable?
◦ How can we incorporate value
addition in reporting?
2201.C1- Internal auditors must
establish an understanding with
consulting engagement clients
about
objectives,
scope,
respective responsibilities, and
other client expectations. For
significant
engagements,
this
understanding
must
be
documented.
 Executive
Summary
 Detailed Report – Audit
Observations
 Appendices
 Objectives
 Scope
 Opinion
or Conclusions
What about the Background
 What
did the audit aim to
accomplish?
 Why did you perform the audit?
 What
did the audit cover and, if
necessary, what did it not cover
and why? Period and Area
 What
are the causes of the
conditions and how severe are the
effects?
 What is really wrong (or right) and
how bad(or good) is it?
 An
internal audit report is a
collection of findings that an
auditor identifies during the
engagement process.

The five components of audit
reporting are:
– Criteria
– Conditions
– Causes
– Effects
– Recommendations and/or Action Plans
Criteria
◦ Company policy requires that all
payments above Ushs 1,000,000
should be approved by the CEO
 Condition
◦ In a sample of 100 payments
above Ushs 1,000,000 paid during
the month of June 2009, 30 were
paid without CEO approval.

Cause
◦ Thresholds for approval of payments
were not being monitored and
followed on a daily basis.
 Effect
◦ Payment procedures are not being
adhered to. There is a likelihood that
fraudulent payments can be made.


Recommendations
◦ All payments that were made
without CEO approval should be
compiled for CEO ratification.
Any payments that the CEO will
find irregular should be
investigated further by the
investigation unit.
◦ All future payments should follow
approved payment procedures
 We
agree with the finding. The
Finance Manager shall compile all
payments affected and have
approvals ratified by December
31, 2009. The CFO has agreed not
to sanction any future payments
without proper approvals.
2420 – Quality of Communications
 Communications must be
accurate, objective, clear, concise,
constructive, complete, and
timely.




Accurate communications are free from errors and
distortions and are faithful to the underlying facts.
Objective communications are fair, impartial, and unbiased
and are the result of a fair-minded and balanced
assessment of all relevant facts and circumstances.
Clear communications are easily understood and logical,
avoiding unnecessary technical language and providing all
significant and relevant information.
Concise communications are to the point and avoid
unnecessary elaboration, superfluous detail, redundancy,
and wordiness.



Constructive communications are helpful to the
engagement client and the organization and lead
to improvements where needed.
Complete communications lack nothing that is
essential to the target audience and include all
significant and relevant information and
observations to support recommendations and
conclusions.
Timely communications are opportune and
expedient, depending on the significance of the
issue, allowing management to take appropriate
corrective action.
 Coherence
 Handling
of technical terminology
 Readability and conciseness
 Sentence clarity
 Replace
unnecessary technical
terms
 Define necessary technical terms
 Manage the number and
definitions of acronyms and
abbreviations
 Include a glossary
 Shorten the sentences
Text Factors Affecting Readability
 Sentence length
 Word difficulty
 Coherence
 Placement of the main
messages
 Layout and graphic design
 Reading
skill
 Content knowledge
 Attitude
 Environment
 Break
up long sentences
 Replace difficult, unfamiliar words
 Eliminate redundancy
 Eliminate wordiness
 Mapped
or table formats
 Paragraph formats
 Electronic-delivery
formats
 Allows
easy navigation for the
reader
 “Builds in "the logic
 Eases the writing
 Encourages conciseness


Enables more coherence
May better meet expectations in some
organizations
 Allow
easy navigation for the
reader
 “Build in”the logic
 Ease the writing
 Can
be applied to the entire
engagement and/or to each audit
observation
 What is rated?
◦ Overall internal-control rating
◦ Risk



Two-point rating
◦ Unsatisfactory
◦ Satisfactory
Three-point rating
◦ Unsatisfactory
◦ Needs improvement
◦ Satisfactory
Four-point rating
◦ Unsatisfactory
◦ Needs significant improvement
◦ Needs improvement
◦ Satisfactory
 High
 Medium
 Low





We need to write actionable reports
Understand who the consumers of our
reports are
Use Report structures that are agreeable
and easy to read and navigate
Include graphics into our reports
Work on the tone, address critical areas and
make our reports as friendly as possible.
Parity Twinomujuni CIA
ptwino@nhcc.co.ug,
parityt@yahoo.com
+256717771665