In his iconic book Sawyer’s Internal Auditing: The Practice of Modern Internal Auditing, author Lawrence Sawyer observes that, “Few sources of friction within the auditing department exceed that caused by the process of report writing. The most brilliant of analyses and the most productive of audit findings seem to be forgotten during the trauma of report writing.” I have often thought that truer words have never been written.
As a young internal auditor, I learned early on how time-consuming and frustrating it could be to write an effective audit report. No matter how well I thought I had captured the results of the audit, the audit team leader would inevitably rewrite much of what I had written. To make matters worse, the chief audit executive (CAE) then would rewrite substantial portions yet again. As my career progressed, I later found myself fulfilling the roles of team leader and CAE that I had so vilified earlier in my career as the culprits who rewrote my reports and undermined their timeliness. I must confess that I found myself rewriting reports and perpetuating the age-old tradition of changing “happy to glad.”
The impediments to timeliness of audit reports are not limited to the players in the internal audit function. As most internal auditors have experienced, the release of an initial draft often is only the beginning of the timeliness challenge. The draft report frequently is received with a resounding thud by those whose areas of responsibility were the subject of the audit. Thus begins the negotiation process and give-and-take over the draft report that may add weeks to publishing a final report. The end result is that writing an audit report often can take as long as it did to conduct the actual audit itself.
Over the past decade, I have worked with numerous audit departments that have tackled the audit report timeliness challenge. Many of them have achieved enviable results in reducing the audit report “cycle time.” From my experience, there are at least five strategies that (if deployed effectively) can substantially reduce the amount of time it takes to report audit results:
Share internal audit results with client “as you go” — Much of the “push back” from audited activity management in response to draft reports often comes from the “shock effect” of seeing all of the audit results at once. Regular communications with clients during the audit — including sharing draft findings and recommendations in writing — can go a long way toward fostering a positive reaction when the full draft report is presented for comment.
Eliminate or reduce levels of review — Multiple levels of review within the internal audit department are often a major contributor to delays in audit reporting. Streamlining the review process and reducing the number of reviewers can be very effective in speeding up the reporting process.
Use team writing or report conferencing — Bringing the audit team together with those who will edit or review the draft report for a single editing session can reduce report cycle time dramatically. It affords the audit team and upper levels of supervision the opportunity to discuss the draft report and proposed changes without the endless back-and-forth that often takes place during the editing process. Report conferencing takes team editing one step further, and includes the client or audited activity management.
Use automated working papers’ report-writing features — Commercially available audit management systems often include features in which extracts from the electronic working papers are automatically imported into a draft report template. In such cases, the draft audit report virtually writes itself. This can generate major efficiencies in the report-writing process.
Streamline the report format — The shorter an audit report is, the less time it typically takes to edit. Internal audit departments that have been successful in reducing report cycle time generally produce lean audit reports that are not only easy to edit, but in turn easy to read. Long and laborious background sections or extensive discussion of audit scope and methodology are the first place to look when streamlining internal audit reports.
There are no quick solutions or easy answers to the age-old challenge of audit report timeliness. However, from my experience, internal audit departments that recognize they have a timeliness challenge and seek to reduce cycle time can make an impact. The strategies outlined above have worked in numerous organizations around the world. I would be interested in hearing from you about any additional strategies for success.