The Grandfather Dialogues
How Do You Write an Audit Report, Grandfather?
by Larry Sawyer
IIA 1974



"It should be inviting. It should ask to be read. It should summarize important points for
the busy reader, and it should give detail for the reader who's interested in the whole story."


How Do You Write an Audit Report, Grandfather? (Chapter Seventeen)

How do you write an audit report, Grandfather?

In such a way that somebody will want to read it.

They have to read it don't they?

Sure. But I've seen lots of reports nobody wants to read.

Why?

They look forbidding. They're hard to read. They ramble. They're poorly expressed. They're just a plain, boring drag.

You mean that after these smart internal auditors - and you yourself told me they're smart - finish a great piece of auditing, nobody wants to read their reports?

I speak the truth.

How could that be?

I really think that sometimes the auditor doesn't understand his own - 0. K., Randy, what word am I about to use?

Objective. That seems to be the thing you always get back to, Grandfather.

Can you think of a better starting place?

No. So what is the objective?

To serve management. That means to provide the very best service possible. And it's really a shame.

What's a shame?

Very often, the one time that the man upstairs knows the auditor is alive is when he gets an audit report. Here is a lifeline between the auditor and the big boss. Here is the chance to really parade the auditor's wares. And what happens?

I don't know.

He very often blows it.

How does he do that?

Lack of salesmanship. He has a great product - yet he packages it in brown wrapping paper.

Don't keep me in suspense. Exactly what is he doing wrong?

Okay. The things he's doing wrong involve:
1. The format of the report
2. The size of the report
3. The way it's written

What's the format?

That's the way it's put together.

What's so important about that?

It should be inviting. It should ask to be read. It should explain what the project is all about. It should tell the reader what he's going to read. It should summarize important points for the busy reader and it should give detail for the reader who's interested in the whole story.

That's a tall order.

So is building a boat. But if you don't want it to leak you'd better build it right.

How do you write the report so that it asks to be read?

Give it an attractive cover. Leave a lot of white space. Use short paragraphs. Write crisp, active sentences. Start with a paragraph that's clear, simple, and attractive. Devise headings that tell you what's coming, and a text that fulfills the promise.

Wow. What else?

Prepare a summary report for top management to read, followed by detailed information for operating management.

Would the two be set up differently?

Yes.

How?

Some auditors have the summary double-spaced and the detail single-spaced. They feel that the extra bit of white space in the summary makes it more inviting and easier on the eyes of higher management.

What if you send a copy to the president? Maybe even the summaries of a whole lot of reports might be too much to read.

Good thinking. In that case, a half-page transmittal memo should go along with the report - just enough to tell him the gist of the report - the highest of highlights.

What would you put in the summary report?

What I think management ought to see.

For instance.

First, a little background to put the audit in its proper place in the company's activities. For a Procurement audit, I'd show the value of total purchases for the year. For an Accounts Payable audit, I'd show the total payments and transactions for the year - and so forth.

What else?

Then I like to show the purpose and scope of the audit - what we set out to do and what we decided not to do.

And then?

An overall opinion. I know a lot of auditors don't agree with that. But it seems to me that when the top men in the company know the auditor has done a particular audit, the first question that comes to mind is: "What's the overall situation?" It's a natural question and it deserves an answer.

Then?

Some comments on the main things brought out by the audit: the things that should be fixed, the things that were fixed, and the steps taken to fix the rest.

How about the detail?

I'd reserve that for in-depth discussions of the problems.

How would you write them up?

Remember the talk we had about deficiencies?

Sure do.

I'd set up the discussions in pretty much the same way. First a punch line, telling what the problem is all about. Then a statement of criteria or standards: how things should be done. What the facts are. The cause. The effect. The recommendation. And, finally,what was done about it.

Suppose they didn't agree with you and told you to go fly a kite?

I'd put down exactly what they said about the situation. And I'd leave out the kite.

Is that it?

Just about.

How about the size of the report.

I think that if there weren't any deficiencies, then just a one or two-page report should do the job. If there were deficiencies, then the detailed section would be as long as it takes to cover them. --

Would you write a report even though nobody had to take any action?

You bet. People shouldn't think the auditor is one-sided. If he's got something good to say about an operation, he should have the courage to say it.

Why courage?

You'd be surprised how some departments might take the auditor to task when he praises another department.

Really?

You bet. So the auditor has to be as sure of his facts when he gives praise as he is when he is critical. Remember what I said about an audit opinion?

Yes. It's a professional opinion.

And every professional opinion must be based on facts - whether the opinion is good or bad. When the doctor examines you and says you're all right you want to be satisfied that he hasn't overlooked some malignant disease.

What's the last thing you said about the audit report?

The way it's written.

What's so hard about that?

A good deal. Simple, clear, concise writing just isn't that easy. It takes study and practice.

I don't understand. If you have something to say, you just say it. And that's that.

No, that's not that. Usually, the average auditor has spent much less time in learning how to write than in learning how to audit.

What's his problem?

Making his writing readable.

Can't he learn?

Of course he can. But it takes work, and it takes an understanding of just why his writing is unreadable.

Do you have any suggestions?

Plenty.

Let's go.

There are dozens of good books on writing, with all sorts of ideas on how to write better. We don't have the time to cover the broad subject, so I'll just concentrate on some of the ideas for keeping writing simple. For example, many auditors get very formal. They make believe that they don't exist and that some disembodied spirit made the audit.

What do you mean?

They have an aversion for the first person. They'll say "It was determined that periodic inventories were not being taken."

How should they say it?

Use the first person. It's direct and simple. "We found that found that periodic inventories were not being taken."

That's simpler.

And easier to understand. Another problem is the long sentence. It's like a meandering trail. By the time you reach the end you've forgotten what the beginning was all about.

For instance.

Here goes: "Of the 250 transactions we examined, using statistical sampling to select them from a population of 10,000, we found that 45 were not properly approved in accordance with the governing regulaions which require the manager's approval in such cases."

I've got a headache.

I sympathize. Listen to this: "Governing procedures call for the manager to approve these transactions. We checked for approvals on a statistical sample of 250 out of the 10,000 transactions in the population. We found that 45 of the transactions were ere not properly approved." Is that better?

Much.

Why?

You get one thought at a time. You don't have to sort things out in your head.

What else was wrong with the first sentence, besides being too long?

It sounds as if not being properly approved was in accordance with the regulations. That doesn't make sense.

Right. Yet I've seen many sentences like that in audit reports. It's one result of jamming a lot of things into one sentence.

How do you keep from writing long sentences?

One way is not to fall into the trap of starting a sentence with "although," "while," "since," and words like that. You're almost sure to wind up with a long and tangled sentence.

For instance.

I've seen something like this often: "Although instructions require three bids for every purchase over $500, we found that 20 out of the 100 procurements we examined were supported by fewer than three bids."

What should it be?

This is better: "Instructions require three bids for every purchase over $500. Yet we found that 20 out of the 100 procurements we examined were supported by fewer than three bids."

Don't short sentences tend to get choppy?

Not if you use connecting thoughts or words. In the correction of the first example I gave you, the word "transactions" knitted the three sentences together. In the correction of the second one the word "Yet" helped the transition and removed the choppiness.

Should you always avoid long sentences?

Oh no. You should mix up short ones with some long ones. Otherwise the reader might start getting breathless. But a good long sentence is hard to write. So try to keep them short. Remember, though, to use connecting words to knit the sentences together.

I see. For instance, the sentences you just used have connecting words like "otherwise," "but," "so,"
and "though." That kept the sentences from getting too choppy, and they carried the thoughts out more
clearly.

You've got it.

What else?

Use the active voice.

Why?

Again, simplicity.

Prove it.

Okay. Which do you like better. "The active voice should be used" or "Use the active voice"?

The second one.

Why?

It's shorter.

Right. Brevity is the soul of wit.

Are audit reports supposed to be witty?

Sorry. I turned pontifical.

What's that?

Never mind. What else?

The active is more direct. It has punch.

Splendid. Using the active voice helps you to write more clearly. And it makes your writing easier to read.

What else?

Be careful with verbs made into nouns.

Why?

That's another way to get tangled up.

Show me.

Here's something I see all the time: Taking a perfectly good verb, making a noun out of it, and then cluttering up a sentence with it.

Like what?

Here's one: "Reconciliation of the accounts was effected."

What should it be?

How much simpler it is to say "We reconciled the accounts."

Any more like that?

Yes. A lot of the "the's" and "of's" are used unnecessarily to clutter up sentences. Eliminate them and the sentences get shorter and clearer.

Such as?

"Preliminary surveys in the planning of audits" becomes simpler when you say "preliminary surveys in planning audits."

How else can you make writing simple?

Parallel construction.

What's that?

It's a form of consistency. Inconsistent writing puzzles the reader. It slows him up and makes him backtrack. The writing is therefore harder to read - less simple.

Give me some examples.

Okay. "The Receiving Department is responsible for recording receipts, counting parts, and the delivery of the parts to Stores." That bothered me, but I don't know why. The words "the delivery of" were not parallel with the other action words. It's much simpler when you say "for recording receipts, counting parts, and delivering the parts to Stores."

I get it.

You also get out of parallel when you mix the active and the passive voice. Like, "The manager considered our suggestions but no action was taken."

I see. It should read, "The manager considered our suggestions but took no action."

Precisely. Now here's a constant violation of the parallelism rule. When thoughts in audit reports are listed they often do not agree with the introduction.

For instance:

The operation is controlled through:
1. Management approvals.
2. Monthly reports.
3. Supervisors made weekly checks.

What's wrong with it, Grandfather?

Item three is out of parallel and is annoying. It should read "Weekly supervisory checks."

Any more?

Loads. But let's just wind up with my pet peeve.

What's that?

Using a fancy word when a simpler and clearer one is at hand.

What words?

Why use "however" when you can use "but"?

Why not "made" instead of "conducted'' or "effected"?

Or "done" instead of "accomplished" or "performed."

Or "use" instead of "utilize."

Or "told" instead of "informed" or "indicated."

Or "carry out" instead of "implemented."

Or "show" instead of "reflect."

Wow. You've given me a lot to think about, Grandfather.

Keep those things in mind when you write your own reports. Then maybe people will want to read them and not just have to read them, Randy.


Audit Wisdom