Effective internal audit report communication : a critical analysis of risk factors

Abstract

Purpose: The purpose of this study is to assess the internal audit process as well internal audit reports drawn up and the way they are communicated. In this way, factors that enhance the meaningfulness of the internal audit report can be identified. This will contribute towards drawing the users’ attention and stimulating management action. Design: In order to achieve such objectives, semi-structured interviews were carried out with practicing internal auditors. Interviewees included both auditors employed within an in-house internal audit function as well as organisations that outsource the function. Auditees were also interviewed in order to obtain a two-fold perspective. Findings: Findings revealed that although improvements have been noted in internal auditing in Malta, there is still room for improvement. Emphasis needs to be placed on understanding the role of internal auditing, insofar that it is a value adding tool rather than an inspector within the organisation. Moreover, improvements can be made in the delivery and communication of internal audit reports and to engage auditees and increase their effectiveness. Efforts must also lay in being clear and concise as well as wording the report carefully and tactfully for auditees to accept findings. Moreover, tools such as grading scales, analytics and visual presentations are also useful in capturing the users’ attention. Conclusion: An auditor might carry out the best audit and present meaningful findings. However, if these are left to fall by the wayside by management, the internal audit function will be unable to contribute towards creating value within the organisation. Thus, by structuring and presenting internal audit reports for maximum impact, the role of the internal audit function will be elevated and recommendations will be made a priority. Moreover, building a relationship with management and staffing the internal audit function with the right individuals will also aid in management accepting findings. Value: The study puts forward a number of recommendations that can be implemented in order to elevate the role of the internal audit function as well as to enhance the reporting process. By adopting such practices, internal audit can make an impact within organisations and only then can it truly add value.