ICAI National Convention on Internal Audit Baroda 23 rd Nov 2013

1. Internal Audit Drafting & Reporting ICAI National Convention on Internal Audit Baroda 23rd Nov 2013 CA. Sapan Gandhi Sharp & Tannan Associates

2. Content Audit Journey03 Query Listing 05 Drafting & Reporting07 Ideate 09 Drafting 15 Editing 22 Formatting32

3. Audit Journey Objective Program Working Papers Final Report Summary Query Listing Draft Report

4. Presentation on Internal Audit Drafting & Reporting 1. Query Listing 2. Drafting & Reporting

5. Query Listing Things to Follow & Review A query listing is “Complete” when it covers the following 5 dimensions of an audit finding. They are…. :

7. Presentation on Internal Audit Drafting & Reporting 1. Query Listing 2. Drafting & Reporting

8. Drafting & Reporting Time Allocation Ideating 40% Drafting 30% Editing 20% Formatting 10%

9. Presentation on Internal Audit Drafting & Reporting Ideate

10. Ideate Linking the Query Listing to the following three aspects: Audit Objective Query Listing Target Audience Accuracy

11. 1. Audit Objective: • Check whether the overall message emanates from the audit objective. • For eg.; No point in highlighting Non moving Inventories when the Audit objective was to conduct an Production Efficiency Audit. • Arrange ideas logically - findings to align with the Audit Objective. • For eg.; Lack of firefighting equipments cannot be the first observation if the audit objective was verification of Non moving inventories.

12. 2.Target Audience: Like most of products every audit report communication also has a different set of target audience. Broadly, there are 3 types of target audience: Decision Implementers Generally called as Process Owners who are assigning the task to implement audit recommendations. Decision Makers Those who are incharge to ensure that multiple processes work smoothly to ensure achievement of business objectives. Decision Governance Those who have to ensure that correct decisions are taken and implemented.

13. What needs to be figured out ? How to put your message “Best” across the target audience.

14. 3. Accuracy • Ensure double checkon your numbers and facts. • Double check your type, quantity and quality of your audit recommendations.

15. Presentation on Internal Audit Drafting & Reporting Drafting

16. Drafting Basics • Be flexible - don’t get too attached to what you have written. • If its a long report, write in segments. • One paragraph – one idea with clear, easy-to-read sentences in short . • Avoid deadly sins of - Jargons , passive voice, drawn out verbs, empty/ repetitive/overstated words, redundant modifiers etc.. • Use Bullets to highlight key information. Usage of charts, photo, tables make information/message easily understandable, than words! • Be specific, concise, clear & accurate.

17. Drafting Advanced • Form &. Content • The first line • Fact v. Flow

18. 1. Form &Content: • Can just a well presented report make for a good report ? • Alternatively, can an exhaustive indepth report always convey a right message ? • Content is the most critical and yet one needs to strike a perfect balance between the two. Form Conveying the Best message Content Substance for a Best Message

19. 2. The firstline • Spend 80% of your time in writing the first line. Why??

20. The firstline

21. 3. Fact v. Flow: • Shami sends Windies crashing as India win by an innings • Mohammed Shami was the wrecker-in-chief as India scored a resounding innings and 51-run victory over the West Indies in the first Test at the Eden Gardens in Kolkata on Friday. • Victory, sealed with well over six sessions left, gave India its fifth Test win in a row, after the 4-0 whitewash of Australia earlier in the year. • Needing 220 to make India bat again, the West Indies could muster only 168 in their second innings. • Debutant pacer Shami utilized the swing available to optimum effect to pick five wickets for 47 runs, to go with his four-wicket haul in the first innings. Match Scorecard

22. 3. Fact v. Flow: In the same manner Instead of We also can • 25 % of Rs 320 lacs inventory is classified as non moving. • Item X used in FG A constitutes 10 % of it. The item was procured in excess of planned production and hence lying as non moving • Item Y & Z used in FG B, though was procured scientifically – unreported quality issues contributed to it biengnot used . Review of analysis of inventory noted that 25 % of inventories are classified as non moving given in the table below (Rs in lacs)

23. Presentation on Internal Audit Drafting & Reporting Editing

24. Editing Basics • Editing required for organization, readability and errors/proof reading. • Editing is rewinding/relook at report to ensure, • Meets its objective, concise, clear ? • Logically organized with complete content ? • Key findings/element/issue fully supported ? • Jargons/other deadly sins are eliminated ? • Message understandable to audience ? • Sentences vary in length, and are most of them short? • Sentences active voice used wherever possible?

25. Editing What to avoid ?? Filler Phrases

26. Redundant modifiers

27. Empty Words

28. Passive Voice

29. Repetition

30. Drawn out verbs

31. Overweighed words

32. Presentation on Internal Audit Drafting & Reporting Formatting

33. Reporting Format (Recommended)

34. Questions ??

35. Thank You CA. Sapan Gandhi Partner, Sharp and Tannan Associates +91 9687 227 776 sapan.gandhi@sharp-tannan.com