Turning an Audit Report Into an Improvement Plan
The pattern
When the audit is signed off, the report is usually filed away and attention returns to the business. The observations in it, even minor ones, rarely get a second look until the next audit approaches.
The cost
Points raised once tend to be raised again. Without a plan to address them, the same observations reappear year after year, and each repeat makes the audit slower and the business look less in control of its processes.
Read the observations, not just the opinion
The audit opinion tells you the headline. The observations and comments underneath tell you where your records or processes are weak. Read them carefully, and ask your auditor to explain anything that is not clear.
Sort the points by importance
Not every observation is equally important. Separate those that affect accuracy or compliance from those that are matters of tidiness, and deal with the first group first.
Give each point an owner and a date
An observation that belongs to nobody does not get fixed. Assign each one to a named person with a realistic completion date, and note what finished will look like.
Fix the cause, not only the entry
Correcting a single wrong entry solves one problem. Changing the step in the process that produced it prevents the next one. Ask what allowed each point to happen in the first place.
Review progress before the next audit
Check the list part-way through the year, not just when the auditor returns. Closing points as you go means the next audit starts from a cleaner position.
The reframe
An audit report is feedback on how the business runs. Treated as a to-do list rather than a filing requirement, it becomes a low-cost way to improve controls every year.
Next step
Take your most recent audit report and list every observation with an owner and a date. If you do not have a report to hand, ask your advisor for a copy and a short walk-through.
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Audit & Assurance→This article is for general informational purposes and does not constitute professional tax, legal or financial advice. Please consult with us directly regarding your specific circumstances.