ICAINationalConventiononInternalAudit

Baroda23rd Nov 2013

Internal AuditDrafting &ReportingCA. Sapan Gandhi

Sharp & Tannan Associates

ContentAudit Journey 03

Query Listing 05

Drafting & Reporting 07

Ideate 09

Drafting 15 Editing 22

Formatting 32

Audit JourneyObjective

Program

Working Papers

Summary

Query Listing

Draft Report

Final Report

1. Query Listing

2. Drafting & Reporting

Presentation on

Internal AuditDrafting &Reporting

Query ListingThings to Follow & Review

• A query listing is “Complete” when it covers the following 5 dimensions of an audit finding.

• They are…. :

Sample Query ListingCondition

“What is” the current condition? Eg; Non moving Inventories more than 365 days are 38% of the total stock.

Criteria “What was” the ideal condition? Eg; Inventories more than 365 days are classified as Non moving

Consequence“What happened” as a result of mismatch between condition and criteria in terms of Risk and Impact? Eg; 38% of Non moving Inventories increase the risk of working capital not utilised.

Cause “Why – What happened” Reason – Route cause? Eg; No linkage between purchase requisitions and ordering.

Corrective Action“What needs to be done” to align criteria with condition? Eg; Linking requisitions with ordering and Inventory levels with requisitions.

Action plan “How will” the corrective action be implemented? Eg; Either through a automated control or manual controls.

Presentation on

Internal AuditDrafting &Reporting 1. Query Listing

2. Drafting & Reporting

Drafting & ReportingTime Allocation

Ideating40%

Drafting30%

Editing20%

Formatting10%

Presentation on

Internal AuditDrafting &Reporting

Ideate

IdeateLinking the Query Listing to the following three aspects:

QueryListing

Audit Objective

Target Audience

Accuracy

1. Audit Objective:• Check whether the overall message emanates

from the audit objective.For eg.; No point in highlighting Non moving Inventories when the Audit objective was to conduct an Production Efficiency Audit.

• Arrange ideas logically - findings to align with the Audit Objective.For eg.; Lack of firefighting equipments cannot be the first observation if the audit objective was verification of Non moving inventories.

2.Target Audience:a. Like most of products every audit report communication also has a different

set of target audience. b. Broadly, there are 3 types of target audience:

Decision Implementers

Generally called as Process Owners who are assigning the task to implement audit recommendations.

Decision Makers

Those who are incharge to ensure that multiple processes work smoothly to ensure achievement of business objectives.

Decision Governance

Those who have to ensure that correct decisions are taken and implemented.

What needs to be figured out ?

How to put your message “Best” across the target audience.

• Ensure double check on your numbers and facts.

• Double check your type, quantity and quality of your audit recommendations.

3. Accuracy

Presentation on

Internal AuditDrafting &Reporting

Drafting

Drafting

• Be flexible - don’t get too attached to what you have written.

• If its a long report, write in segments.

• One paragraph – one idea with clear, easy-to-read sentences in short .

• Avoid deadly sins of - Jargons , passive voice, drawn out verbs, empty/ repetitive/overstated words, redundant modifiers etc..

• Use Bullets to highlight key information. Usage of charts, photo, tables make information/message easily understandable, than words!

• Be specific, concise, clear & accurate.

Basics

DraftingAdvanced

1.Form &. Content

2.The first line

3.Fact v. Flow

1. Form & Content:• Can just a well presented report make for a good report ?• Alternatively, can an exhaustive indepth report always

convey a right message ?• Content is the most critical and yet one needs to strike a

perfect balance between the two.

FormConveying the Best

message

ContentSubstance for a Best

Message

2. The first line• Spend 80% of your time in writing the first line. Why??

The first line

3. Fact v. Flow:Shami sends Windies crashing as India win by an inningsMohammed Shami was the wrecker-in-chief as India scored a resounding innings and 51-run victory over the West Indies in the first Test at the Eden Gardens in Kolkata on Friday.Victory, sealed with well over six sessions left, gave India its fifth Test win in a row, after the 4-0 whitewash of Australia earlier in the year.

Needing 220 to make India bat again, the West Indies could muster only 168 in their second innings.Debutant pacer Shami utilized the swing available to optimum effect to pick five wickets for 47 runs, to go with his four-wicket haul in the first innings.

India Bowling O M R W Nb RPO

Bhuvneshwar Kumar

6 1 20 1 0 3.33

Mohammed Shami

13 0 47 5 0 3.57

Ravichandran Ashwin

19 2 46 3 0 2.42

Pragyan Ojha 13 3 27 0 0 2.08

Sachin Tendulkar

3 0 18 0 0 6

Match Scorecard

3. Fact v. Flow:In the same manner

Instead ofReview of analysis of inventory noted that 25 % of inventories are classified as non moving given in the table below (Rs in lacs)

Item Value % of Total Inventories

X 25.00 10 %

Y 12.50 5%

Z 25.00 10 %

Total 80.00 25 %

• 25 % of Rs 320 lacs inventory is classified as non moving.

• Item X used in FG A constitutes 10 % of it. The item was procured in excess of planned production and hence lying as non moving

• Item Y & Z used in FG B, though was procured scientifically – unreported quality issues contributed to it bieng not used .

We also can

Presentation on

Internal AuditDrafting &Reporting

Editing

EditingBasics• Editing required for organization, readability and errors/proof

reading.

• Editing is rewinding/relook at report to ensure,

Meets its objective, concise, clear ? Logically organized with complete content ? Key findings/element/issue fully supported ? Jargons/other deadly sins are eliminated ? Message understandable to audience ? Sentences vary in length, and are most of them short? Sentences active voice used wherever possible?

EditingWhat to avoid ??

Filler Phrases

Redundant modifiers

Empty Words

Passive Voice

Repetition

Drawn out verbs

Overweighed words

Presentation on

Internal AuditDrafting &Reporting

Formatting

Backdrop Finding

Action Plan Target Implementation Date

Reporting Format (Recommended)

Questions ??

Thank You

CA. Sapan GandhiPartner, Sharp and Tannan Associates+91 9687 227 776sapan.gandhi@sharp-tannan.com