How To Write An Audit Report – Contents of Internal Audit Report 

audit report

To write a high-impact audit report, you need lots of practice and time with proper guidance. It must be done per the standards and in alignment with the primary objectives to effectively explain the whole audit management process. To learn how to write a good audit report, you must look for some tips and best practices.

The first step should be penning down the detailed writing format for the report. Utilizing the standard internal audit report formats provided by ISO and other organizations is always better. Brainstorm how you will present your information and what stats you will be including because overwhelming them with unnecessary facts and figures will bore them sooner. Keep the 5 C’s of internal audit report writing in mind.

You can search for audit report templates (audit report samples) to get a quick idea.

How to Write an Internal Audit Report?

Do you know the what is the best internal audit report format? For an Internal audit summary report, a standard template is usually followed to meet the core objectives and requirements that the addressee has asked for. The better the report format, the clearer the picture of the business’s financial status.

The audit report structure must have the below-mentioned sections in the same sequence but you can make slight changes such as adding follow-up section:

  1. Title & Cover

How to prepare internal audit report? Let’s start with a simple yet engaging cover that must leave a good impression. After all, it will be the first point of contact with the reader. A quality internal audit report cover page speaks for the auditor’s efforts. Your cover should provide the readers with the title, auditor’s name, the end date for audit, and the company’s name being audited. Don’t forget to mention “Independent Auditor’s Report” in the title as per the internal audit report structure.

  1. Addressee details 

Addressee means the person who will be addressed in the report, a person responsible for hiring the auditors. It is usually the shareholders of the company. Their professional life, designation, duty roles, and essential employment incidents or experiences must be highlighted. It makes the internal audit report presentation more engaging.

  1. Introduction

One of the most important headings in an internal audit report writing format! This section must highlight the significant points to have a better understanding and give a quick overview to understand why the audit report is presented, such as:

  • The area/departments being audited
  • The processes being audited
  • The standards followed while conducting an audit (ISO 9001, ISO 14001, etc.)
  • Any historical financial information
  • Any facts that readers must keep in mind while reading the report

It must be concise but legible and authentic. No false facts or unverifiable statements must be made.

  1. Scope & Objectives

As the heading implies, the scope and purpose of the audit must be explained thoroughly. After reading this section, the addressee must understand:

  • What the audit is really about
  • The reasons why the audit risk areas are of importance to the company
  • Any limitations on the scope of work completed
  • The members responsible for conducting the audit
  • Why internal controls are tested 
  • How Company’s accounts are inquired about and verified

The auditor must provide credible proof that the audit examination of the company’s financial reports has been completed per the country-wide accepted standards. The evidence must be legitimate and free of material misstatements to make the shareholders or investors believe you.

internal audit report
  1. Opinions

One of the essential sections of any internal audit report is the auditors’ opinions concerning the business’s current financial status. It can be:

Unqualified or Clean OpinionThe highest grade opinion signifying that the report is generated and maintained in full compliance with the Generally Accepted Accounting Principles (GAAP) without any misstatements in financial records.

Qualified Opinion: It is issued only if the company fails to maintain financial records following GAAP. However, the report is free of misstatements or when unacceptable disclosures are provided for the financial accounts.

Adverse Opinion: Lowest-grade opinion, or the worst type of opinion given on the internal audit review report explaining that records are neither conformed to the GAAP nor free of misrepresentations. It directly puts the company in the lousy spotlight, being called a fraud.

Disclaimer of Opinion: If the company fails to prove its financial status or the auditor is unable to determine the status due to the lack of details.

  1. Results

Once the reason for auditing is explained, issues with their root causes are identified, flaws in financial records are highlighted, opinions are made, and the final verdict of the auditors’ team is provided. The result section summarizes the major findings supported by credible references and criticizes the performance of the management in resolving formerly acknowledged problems.

  1. Recommendations 

It is a point where you suggest new action plans to meet the deficiencies of the financial department considering the records. The skilled auditors can only play an advisory role, making recommendations or encouraging them to take certain actions to get rid of problems, but the final decision will be taken by the management

  1. Conclusions

It is considered the end of the internal quality audit report format where auditors are asked to add more comments (positive or negative) that cannot be mentioned in the result section. It goes beyond the individual issues of a company’s corporate governance. You can write an internal auditor’s opinion in this section as well. Most importantly, it gives you extra space to write positive notes to appreciate the management team.

The internal audit annual report is finalized after examining the company’s internal control systems deficiencies, which have some common sections, as mentioned above.

  1. Terminologies: 

Provide a short and easy-to-understand definition for each and every term you have used in the structure of internal audit report. It makes it easier for everyone to understand the information.

  1. Auditor’s signature and Place of the signature

At the end of the internal audit reporting structure, don’t forget to add the auditor’s signature on the report for credibility. The auditor must mention the city in which the report is signed.

  1. Date of the Internal control audit report: 

Always mention the date when the auditor signed the audit report.

Create an Executive Summary

Do you really think that senior executives read every word or go through every page? Well, they don’t have enough time to do so. That’s why draft internal audit report with an executive summary highlighting key points such as important dates, procedures, factual statements, and figures.

It must summarize all data and present it to the decision-makers to determine if they need any new action plan. It must not take more than 30 minutes to read. 

In literal meanings, “it is a compact debate of the conclusions of the auditing tasks completed in a complete audit report layout.”

Audit Services to Improve Operational Control

With the help of experienced, professional, and skilled accountants at Profits plus, you can handle an organization’s internal audit more efficiently. We have assurance and consultant services with risk advisory to help you reach your ultimate goal. Our team always selects the most beneficial standard policies for Dubai-based businesses while guiding them through auditing and supervising financial operations.

27 Tips For Writing Internal Audit Report | Best Practices To Make Report Persuasive

Internal Audit Report

For those who don’t know what is internal audit report, it is an essential deliverable of the audit engagement which must explain all the efforts that have been made, all the steps that have been completed, and all the decisions that have been taken while conducting the audit. It must contain the results of the whole audit process summarized with facts and supported with credible references.

You can call it a good internal audit report only if the contents of internal audit report make the readers understand its objectives clearly along with describing the scope and findings of your audit engagement. Every company tends to have their audit report template (internal audit report layout). To make your internal audit engagement a complete success and draft the best internal audit report, it is advised to follow the rule of 20:40:40:

  • Spend 20% of your energy on developing a detailed plan for the internal audit
  • Use the first 40% of your efforts in fact-finding, making observations, examining, and conducting fieldwork.
  • Keep the second 40% of your energy reserved for the internal audit findings report.

Top 27 Internal Audit Report Writing Tips – Internal Audit Reports Best Practices 

If you have been questioning yourself “how to write an audit report”, you must look for the below-mentioned tips!

  1. The best practice is to start creating the report’s rough draft from the very first day of the fieldwork. Day 1 of engagement should be your day 1 of writing an internal audit summary report to avoid unforeseen delays.
  2. Like other auditors, do you also want to be called the “bearers of bad news”? If not, then you must check your tone and selection of words. The time has changed, and now the “Give and Take” approach is preferred as it creates a favourable business environment radiating pleasant vibes. BUT, don’t exaggerate your positives and balance them with negatives.
  3. A report will only get a higher rating and be comprehensible when the content revolves around your core objectives. The information must clearly explain the purpose of the draft.
  4. You must have used terminologies in the report, and they must be explained for a better understanding at the end of the report.
  5. Never miss out on proofreading internal audit reports before the final presentation. Keep a review internal audit report checklist for each step to limit the risks of avoidable mistakes. It is advised to never finalize the report without checking for the spelling, grammar, formatting, and factual or numerical errors.
  1. Timely reporting and communication with team members are necessary to maintain stability, transparency, and a collaborative environment.
  2. Limit writing your executive summary of the internal audit annual report to 1 page of the Word document and 1 PowerPoint slide that must not take more than 10 minutes for the readers. The senior management must keep it compact for a better influence.
  3. Avoid writing material misstatements in the scope and objectives paragraphs of the report.
  4. The best internal audit report format is title cover, addressee details, introduction, scope and objectives, opinion, basis of the opinion, results, recommendations, conclusions, auditor’s signature, place of the signature, and date of the audit report.
  5. The standards you are following for auditing processes must be highlighted in the introduction section, for example, ISO 9001, ISO 14001, etc.
  6. Never overwhelm your report with the company’s positives. Make a “Findings Sandwich” where you will be making layers by explaining positive and negative points alternatively. Although, you better end your report on a positive note.
  7. For the content, you must use bullets to your best. It is easier to catch the reader’s attention with bullet points.
  8. The purpose of internal audit report is not only to explain engagement results but also to make practical recommendations and find better opportunities to make greater progress.
  9. Apart from bullets, the internal audit report’s content must have tables, charts, and graphs summarizing essential stats.
  10. While writing the detailed observations, make sure that each issue comprises all 5 c’s internal audit report (Criteria, Condition, Cause, Consequence, and Corrective Action Plans/ Recommendations).
  11. To keep the report legible and authentic, reference every point. Making unverifiable claims will make you lose your credibility.
  12. Take full advantage of indices, appendices, and tables for bridging any information gaps.
  13. Putting too much data will bore the readers. The report must have specific information to make it persuasive and logical. Eliminate redundant ideas to maintain readability.
  14. Whenever you discuss any issue, it must be explained with its root cause.
  15. We all have heard “first impression is a last impression” that is why make a good impact with a quality cover. It must not skip any important information, including report title, name of auditor responsible, audit end date, name of company or business unit audited.
  16. Scientifically, you can keep the audience engaged in reading one paragraph for not more than 5 seconds. That’s why keep the 3-5 second rule in mind and try covering maximum information in the starting lines.
  17. A good audit report must be drafted and critically evaluated from the audience’s perspective. You must be aware of their interests, demands, and preferences.
  18. One of the best approaches to draft internal audit reporting is to emphasize the important data by circling or underlining it, highlighting it with different colours, or changing its format to bold or italics.
  19. Mentioning particular teams or blaming others for the failures in internal control audit report presentation should not be the aim. The problem must be seen universally.
  20. Always keep the internal audit report rating system in mind to help highlight the issues accordingly. 
  21. Get rid of all the unnecessary descriptive adjectives, adverbs, or pointless information from your “executive summary.” Use numbers, facts, stats, figures, and percentages while summarizing your report’s content. 
  22. Always make your internal audit reporting lines brief yet understandable and move with brevity!

Profits Plus’s Internal Audit Service – Designed to Improve the Reliability

Profits Plus has a team of certified accountants who are always ready to guide Dubai-based businesses throughout the internal audit process and provide outstanding risk advisory. From measuring the procedure’s effectiveness to supervising financial operations, we ensure you adopt the policies that help you improve internal operational control.

8 Different Types of Accounting Practices

How do you plan on expanding your business without knowing how many resources you are left with, how much revenue you can expect, and how much money has been spent on taxation? You simply can’t! 

Every business needs a stable accounting department responsible for keeping the owners updated about the current financial position along with anticipated percentages of profit or loss. 

8 Types of Accounting Practices 

To keep your finances straight and up-to-date with the company’s cash flow, you must be familiar with all eight types of accounting. 

  1. Public Accounting 

As the name suggests, public accounting is a practice where a businessman allows an independent accounting firm’s certified public accountants (CPAs) to keep their company’s accounts, financial records, bank statements, and related information in check and balance as a few of the financial documents are necessary to be publicized. UAE has plenty of well-known public accounting firms offering additional services, such as bookkeeping, financial consulting, and payroll services, apart from auditing and taxation. 

The firm will be held accountable for strategizing business plans, suggesting profitable mergers, and making acquisitions while keeping the internal accounting system streamlined. 

  1. Private Accounting 

It is an accounting practice where an accounting professional (expert) is recruited to bring the business’s accounting and other information in order. He is responsible for recording finances properly and keeping them updated. The accountant will be provided full authority to tackle all financial, tax-related, and managerial accounting issues within the organization. 

  1. Government Accounting 

A practice where government agencies responsibly deploy state auditors (or equally eligible individuals) for recording, creating, and anticipating budget (income and expenditures) in accordance with the Governmental Accounting Standards Board (GASB). Agencies will set reporting standards and track: 

  • How public money is being spent 
  • Amount of the remaining available funds 

 It is a valuable step in ensuring that financial, accounting, and related information is accurate.  

  1. Financial Accounting 

This accounting principle is a traditional practice and serves the purpose of keeping an updated record of each transaction, maintaining a balance sheet for trailing the financial situation, pinning down assets and liabilities, informing shareholders about the financial shifts, and providing the owners with the detailed summary of cash flow. A financial accountant expert (secretaries, stock intermediaries, chartered accountants, etc.) is obliged to follow internationally or locally recognized accounting standards to prepare financial statements and the statement of change in equity. 

Two main types of financial accounting are cash accounting (mainly practiced by SMEs) and accrual accounting (suitable for larger businesses). It is necessary to define the company’s existing financial status. 

  1. Cost Accounting 

It only collects and analyze information regarding the company’s expenditure on manufacturing products. Cost accounting helps you make sensible decisions about future inventory, production, manufacturing, and supply spending. It comprises fixed costs, variable costs or input costs, etc. and is aimed at finding the cost gap between the estimated and the actual cost of production. 

  1. Forensic Accounting 

Forensic accounting is inevitable for any business as it serves the function of a financial detective, responsible for: 

  • Scheduling timely evaluations to get a hold of financial fraud 
  • Finding lawful proof of malpractices 
  • Submitting evidence to the courts to prove the case of embezzlement 
  • Writing an accounting report in easy terms for the court to explain if the company is carrying out illegal procedures 
  • Analyzing data to determine the missing amount  
  • Suggesting practicable solutions to recover the lost amount 
  • Highlighting misstatements and verifying controls 

You can either keep it in-house or hire forensic accountants. 

  1. Management Accounting 

Like financial accounting, management accounting involves using statistical tools and approaches for recording data and analyzing financial transactions. By using these statistics, accountants manage to infer current or upcoming trends as well as forecast financial liabilities. It not only considers the company’s expenses but also non-financial aspects of the business to make profitable decisions.  

The three most common categories of management accounting include strategic, performance, and risk management. Depending on your business needs, you can implement one or all three at once for obtaining information. 

  1. Tax Accounting 

A type of accounting solely designed to check the company’s tax liabilities: registration, returns, deregistration, and payments.  

In UAE, tax accountants take care of VAT-related issues. They check if your company needs to pay tax, what amount, and when. With their proper help, you will be paying the respected amount of taxation without delays, saving you from administrative penalties. It ensures that you are following all-time changing tax laws. 

How Profit Plus Can Help in Accounting 

Outsourcing your accounting needs is beneficial for highlighting high-level risks of future events and preparing you to embrace unforeseen circumstances. Profit Plus has qualified British accountants for delivering high-class accounting practices and maintaining financial transactions properly for SMEs and large companies to survive in the long run. We will not only let you save big on money but also give you a golden chance to benefit yourself from professionalized and personalized VAT services.  

Contact us to consult about different types of accounting practices in the UAE and audit-related queries, as we will help you select the most suitable approach for your business. 

 

Tax accountants get your all tax responsibilities done!