Guidelines : Audit
- Summarize the major message (compliance, noncompliance, discrepancies) up front. Various accountants will then later examine details to carry out recommendations in their respective areas.
- Don’t be overly formal. Audit messages are no more sacred than many others. Formality has nothing to do with making the message “official.” Don’t be afraid to use the active voice, personal pronouns, and a conversational tone. For example, “Pursuant to the discussion Friday, February 2, 19–, review was made of the investment accounts of the subject subsidiaries” would be better written as: “After our discussion Friday, February 2, I reviewed the investment accounts of the Cummings, Cum-Helcro, and Comstock subsidiaries.”
- Use headings when appropriate. Headings guide multiple levels of readers to the sections of their interest. These headings become even more crucial in a lengthy discussion of findings and recommendations to be carried out in several accounting areas.
Example 1: Audit memos
TO: All Employees
SUBJECT: Billing of Investors
In auditing the January 19– billing, I noted the investors had been correctly charged in accordance with the 19– Hite Exploration Agreement except for one area: Six trips totaling $1,833 for the first-level supervisor in the Production Department had been incorrectly charged to the investors. This charge should be made to the non-operators.
I recommend the prior months’ billings be reviewed and procedures be outlined to ensure investors are charged per the Hite Exploration Agreement. To correct the January billing errors, I recommend adjustments be made in the following billing cycle.
Example 2: Document for audit recommendation
TO: All Employees
SUBJECT: Audit of Approved Vendors List
At least 20 percent of the vendors currently used by Sedco are not on the approved vendors list as required by written procedures.
We recommend the objectives and procedures of this vendor control be re-communicated to all involved individuals. Accounts Payable should compare invoices to the approved list and return invoices from unauthorized vendors to the appropriate manager for proper handling. The manager in charge must approve all additions to the vendors list. All departments should update their approved lists by September 30.
Sedco’s written procedure states: “Corporate business will be conducted only with vendors or contractors on Sedco’s approved vendors and contractors list. Any additions must be made by the appropriate manager.”
This is to ensure we are doing business with reputable, established vendors. Therefore, all departments should take care to see their lists are updated and decisions about additions remain with the appropriate managers rather than first-level supervisors.
Example 3: Audit report templates
SUBJECT: Audit of Employee Discount Information
Effective immediately, we will be auditing all information in the memory banks of the registers to review the employee discount records.
We have recently discovered many items which were entered under employee discounts but do not bear the employee’s name on either the check or credit information. Since no one can enter an employee discount without the employee’s private code, we have ruled out the possibility of employees giving discounts to friends by using another employee’s account.
Please be aware we may be questioning you concerning various activities recorded on your individual account.
Example 4: Audit of employee discount information letter
SUBJECT: Audit Of Accounts Payable
It has come to our attention that several firms to whom we owe money have not been receiving their monthly payments. We are, therefore, conducting an audit of all files (on disk and paper), of the accounts in question.
If you have any information concerning these problems, please contact Sally Cushing. We appreciate any help you can provide in resolving this matter.