In the past, businesses and tax-exempt organizations frequently entrusted the preparation of adjusting journal entries, financial statements, and account reconciliation to accountants from their audit firms.
Smaller organizations often lacked the level of accounting sophistication necessary to carry out these tasks. Do you want to learn how to write a good audit report that is digestible and effective at motivating stakeholder action? Read this blog ahead to find out What are 2 important things to be included in the key audit matters?
What is Considered a Good Audit Report?
It is important that a good audit report has all the necessary information. Moreover, the objectives, scope, and findings of an audit engagement should all be communicated properly. By doing this, it would motivate the reader to take internal audit recommended actions. So, what are 2 important things to be included in the key audit matters?
Description of the Key Audit Matters
Each key audit matter should be clearly described and explained in the audit report. This description should include the nature of the matter, why it is considered significant, and its impact on the financial statements. The goal is to provide stakeholders with a comprehensive understanding of the specific areas that required the most attention during the audit.
Auditor’s Response and Approach
For each key audit matter, the auditor should outline their response and approach to addressing the matter. Furthermore, this may include describing the audit procedures performed, the extent of testing, the use of specialist knowledge or external experts, and any challenges or complexities encountered during the audit process. Providing insights into the auditor’s methodology and how they arrived at their conclusions adds transparency and credibility to the audit report.
What Should Be in an Audit Report?
- Scope and objectives
- Results
- Recommendations and action plans
- Conclusions
- Opinion
- acknowledgment of satisfactory performance
4 Tips for Writing an Effective Executive Summary
The desired outcome of the report should be understood by its contributors in order to write a great audit report. An audit report must inspire leadership to implement internal audit recommendations in order to have an effect on the organization.
Know Your Readers
You need to understand who is going to receive the report. Moreover, the executive summary should give an overview of the detailed report that resonates with every executive officer who reads it. So, it is important you understand your organization’s culture. According to Audit Board, for example, if your report is going to the CFO and you have IT audit findings, make sure that you don’t have to be an IT expert to understand what the issue is.
Cut the Fluff
The summary should be one to two pages. Similarly, aim for brevity as much as possible. As there will be more takeaways in the detailed report, you need to consider the best way to summarize each point. To help drive points home, wherever it is possible, use numbers and percentages. Remove anything that seems unnecessary.
Explain it to the Company
The way everything is written in your executive summary should be written in a way that is easily understood by whoever reads it. Moreover, the terminology, level of sophistication, and the level of writing need to be clearly understood.
Make it Digestible
Whether it is a big, scary finding or a positive one, for any key point, bring the reader’s attention to the information as concisely as possible. Similarly, utilize a visual layout to direct your audience’s attention to each of your most crucial takeaways or messages.
