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RAPPORT

Information distillation

Today's audit reports need to boil away the essential to quickly get to what's important to stakeholders

?A company president once told me shortly after I joined the organization that he didn't understand why he was receiving copies of internal audit reports. He didn't understand how they were relevant to his work. He had better uses of his time than reading our reports.

He is not alone. Drew Stein, a board member and former CEO in New Zealand, has written, "Almost all of internal audit findings are mundane operational compliance issues." 

When organizational leaders don't see value to them in what internal auditors share — even questioning whether they should waste their time reading audit reports — something is wrong and change is needed. These leaders will only see value if internal auditors' communications are about issues that matter to them and to the organization's success, and provide clear, concise, and actionable information. In other words, auditors must provide them with the information they need to be effective leaders.

In an era of dynamic change, organizations and the managers who run them are also changing how they monitor and run the business. In particular, they must be ready to make decisions quickly because risk and opportunity don't wait for them. A decision delayed is often a decision that is made by a competitor.

In many ways, the internal audit profession has challenged many of its traditional, tried-and-true methods and principles to meet these changing stakeholder demands. One thing that hasn't changed is that many internal auditors are still communicating their findings through a traditional audit report, and that may not be sufficient. They may not realize that the International Standards for the Professional Practice of Internal Auditing does not require a formal, written audit report. Standard 2400: Communications requires that "Internal auditors must communicate the results of engagements." The Standards require communication, and internal auditors should consider how they can communicate effectively.

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