Feedback from clients can serve as validation of the auditor’s analysis of data, compilation of information, approach to the audit and observations, and acceptance of the recommendations.
Auditors should seek feedback in a way that helps improve their audit performance. Feedback is more effective when it reinforces what the auditor did right instead of wrong, and it allows him or her to judge what needs to be changed during the course of the audit. Moreover, feedback is best when it relates to a specific observation, data analysis, or audit query; is timely; and is delivered appropriately. It should be to the point, constructive, and provide relevant details, as any gap will lead the auditor in an unwanted direction.
Though feedback can be given at any time, there are steps internal auditors can take to ensure that the feedback they receive is useful and constructive.
Frequency and Stages of Feedback
Client feedback can be given regularly during the audit or as requested by the auditor, and it is a normal part of any audit. Practitioners document client feedback and use it as a foundation for the next level ofn audit review or incorporate it into the audit report, itself. Useful feedback can help steer auditors in the right direction and increase audit effectiveness. There are several times when it is appropriate to ask for feedback.
During the Opening Meeting The first step toward transparency and positive participation with the audit client is establishing clarity around the objective and scope of the audit, tentative duration of review, and initial records and details that are required during the kickoff meeting. The meeting gives the client an opportunity to raise questions and ask for clarifications, if any, from the auditor. It’s important that the client leave the meeting with a clear understanding of the process and realistic expectations so the audit starts off on the right foot.
When the auditor is explaining the objectives in the kickoff meeting, he or she also should reference how the reports or management requests will be used to review certain areas to gauge whether relevant processes or controls need to be strengthened. The client’s participation and feedback in this discussion will help finalize the scope of review and determine acceptance, ownership, and accountability.
Clients should recognize that their enhanced performance, through the auditor’s recommended corrective measures, will help in achieving their department’s objectives. So establishing an honest understanding of audit objectives and respective roles of auditor and client should take place before the start of the audit.
During the Audit The auditor applies different approaches and techniques during the audit review and communicates verbally and in writing when an issue arises. The client’s responses, actions, reactions, and behavior are the kind of feedback an auditor should look for when the audit is being conducted. After explaining the scope and objective of the audit in the kickoff meeting, the auditor should ensure that the review is being conducted within the same scope, without any intention to find mistakes, errors, or fraud.
If the client feels any sense of negativity about the audit, he or she may withdraw and be reluctant to provide information or feedback. The end result may mean extra effort by the auditor, lack of confidence by the client in the audit process, and nonparticipation of the client in the process of improvement.
Closing Meetings These meetings occur when the audit is drawing to a close and the observations, root causes, rating of observations, and corrective measures need to be finalized. The type of feedback will differ in content and style based on who the client is (e.g., department heads or executives).
The details of targets and responsible staff are also discussed and finalized during this meeting. Getting feedback in the closing meetings should go smoothly if the auditor has been transparent in his or her approach to, and conducting of, the audit. To ensure useful feedback is received during this stage, auditors need to clearly present observations, explain the referenced documents and records, and make sure the supporting data analysis is understandable and relevant to the audit.
Though auditors get feedback at different stages of the audit, and from different levels of management, in many organizations clients provide overall feedback on the performance and value added by the internal audit function. After the audit report is finalized, the client may give feedback on the audit techniques used, the auditor’s understanding and knowledge of the area audited, and the auditor’s communication and presentation skills. The list of points for feedback can be elaborate enough to enhance auditor/client participation and, ultimately, audit effectiveness. Organizations may even require that the auditor rate different clients on defined criteria, which could include providing relevant records and details timely, and implementation of corrective measures as planned.
A post-audit questionnaire (see this sample Client Feedback Questionnaire.pdf) can be given to the client to rate internal audit on the pre-audit kickoff interaction, the execution of audit review, and the finalization of review. Questions may include:
- Was the audit team considerate of issues raised by the client in deciding period of review and availability of staff and other resources?
- Did the auditor have adequate knowledge of the processes, systems, and relevant controls of areas under audit?
- Were observations supported with relevant detail and documents?
- Were final observations well-presented and concluded with the concerned client?
Honest feedback from clients can lead to improvements in the effectiveness of systems, controls, and governance. Internal auditors should consider the feedback and show a willingness to change in areas where improvement is needed, while being strong enough to stand by their assessments and findings.
Client feedback on different aspects of the audit sets a benchmark, or highlights the gaps, in management’s acceptance of internal audit performance. Clients expect to have the opportunity to give their perspective, a process that helps to gain their commitment in supporting audit activities and working with internal audit to achieve organizational goals. Adopting and implementing a collaborative approach to feedback and highlighting the aim of supporting clients in improving organizational performance ensures a positive experience for all involved.
A version of this article first appeared in the December 2014 issue of Internal Auditor Middle East, the magazine of IIA United Arab Emirates.