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Writing audit reports, the four-eyes principle, and the danger of “red pen mania”

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When writing audit reports the “four-eyes principle” can add value. A second set of eyes provides an element of security. The 2nd reader catches looks at the complete audit report with fresh eyes, spots things the report writer may have missed, and picks up on structural, stylistic and language issues.  However “red pen mania” (also known by some as “correction compulsion disorder”) can give the four-eyes principle a bad name. Give a manager a red pen (in other words the organisational authority to check someone else’s written work), and you may get more than you bargained for!

The other day I had the good fortune to interview a French client who is a senior compliance officer working at a regulatory organisation overseeing the financial institutions in a European country.

What does a typical audit report look like and how strict are the guidelines?

The format is dictated by the subject matter. The biggest difference in approach and contact would be between internal reports and reports for recipients outside the organisation, our clients if you will.

How do you go about drafting an audit report?

I would describe the approach as “forensic”. There is a lot of detailed research, fact gathering and analysis. I stress again, we have to be absolutely sure of our facts.

And who is the primary recipient of the report?

Internal reports as a rule are addressed to senior management. External reports are read by the CEOs of banks and other financial institutions, so we have to be sure of our facts. Remember, if we discover a compliance failure, the company will be spending a lot of money to put it right. We have to be sure of our facts.

Is there a 4 eyes principle?

4 eyes? How about 6, 8 or even 10 eyes principle?

How does this work in practice?

The responsible manager and his or her team drafts the first report and this is fine-tuned at a junior level, before being submitted to the next level of management. Ideally the accuracy and completeness of facts should be the first priority. Language style and grammar should be done when the accuracy of facts has been achieved.

Are suggestions for improvement open to discussion?

Interesting point. When a more senior manager makes a suggestion, it is more than a suggestion. Of course, as the compliance officer responsible I have to ensure the facts are correct and complete. What often happens is that a senior manager, does not dispute the facts, but asks what exactly does this mean or you need more information on this point. This feedback is always welcome and is an important part of the 4 eyes system.

What about language and style?

Accuracy (facts) and style (language) are both important and, as I said, getting the facts straight is not an issue. Neither are suggestions on wording. Remember what we point out as an action area incurs big costs We have to be careful not give the impression we “ordered” a particular course of action, otherwise our “client” can blame us, if a particular course of action does not work or, even worse, leads to financial loss. We would tend to pinpoint the problem and encourage the client to develop an appropriate remedy. Once again, 4 eyes feedback is here is invaluable.

I have the impression there is an area of 4 eyes feedback that is problematic. Would you care to elaborate?

You’re right. Case officers are generally intelligent and literate and do not write gibberish. In any case there is a language clarity check at a junior level. Style is a problem. Style or phrasing is often a personal preference. Unfortunately some senior managers, even if the facts are fine, feel obliged to fine tune the language – even when it does not need fine tuning. So then the red pen comes out and “we considered” becomes “it was considered that”; or “the problem I am alluding to” becomes the “problem to which I am alluding”. And if the senior manager does not like or understand alluding, then expect talking about, the rationale being plain English.

So what was the worst case of red pen mania you ever came across?

Bearing in mind an average report goes through 30 plus drafts, the world record in my experience was 55 drafts. After 36 drafts I just accepted all corrections (using the word correction tool, so it was quick and painless). Amazingly the reports kept coming back. One manager started correcting his own corrections! In my opinion, there are three things going on here. First the natural need to show power. Second the problem of insecurity and competence. And last but not least a problem peculiar to governmental bureaucracies. They do not have the cost discipline, and therefore the time discipline, that would nip this in the bud. I have worked in the private sector. I am by no means a neo-liberal market fanatic, but this would not happen in the private sector. Yet government organisations have too much slack and can afford this self-indulgent waste of resources.

Thank you for your insights. We respectfully ask all audit managers to remove all red pens from their desks. And by the way, what do you do with junior managers who have difficulties writing clearly and concisely with completeness of facts?

[laughs] They are sent on a report writing course. For example at Target Training. So keep offering your seminars on writing audit reports and we’ll keep sending our employees!

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How to ensure your internal audit report drives decision making

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Internal audit reports – a waste of time?

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influencingAfter a cursory glance at recent headlines on FIFA, IAAF and VW you might be forgiven for thinking internal auditing and corporate governance have failed spectacularly. On the assumption that all these organisations have a functioning internal audit system in place, I can only assume that the most concise, most clear and most complete audit report does not stand a chance against a political decision taken in the upper echelons of an organisation’s management – which brings us to our message: despite these high profile negative examples, an audit report should support management in their decision making. So how do I, as an internal auditor, ensure my reports drive decision making?

Writing your internal audit report with your reader in mind

The answer is in a nutshell accessibility and readability. Let’s start with the reader, the manager. Try a little organisational empathy and put yourself in his or her shoes. They want clarity on the key issues; time is a factor so they want the issues visibly flagged up. In my experience of working with various audit departments I have seen corporate guidelines which demand all audit reports are minimalist and reduced to bullet points consisting only of problems and measures. At the other extreme I have seen “traditional”reports, complete with footnotes and dense prose, which would make Sir Humphrey from Yes Minister green with envy. So, obfuscation or clarity?

Balancing your content and context when writing internal audit reports

As we deliver training on report writing for internal auditors , let me come off the fence. I recommend a minimalist approach. Your organisation should agree a report structure that sets out the information efficiently. I would also recommend standard language and formulations so as to ensure consistency and common understanding. The manager should be able to say, “My focus was directed immediately to those issues that needed action, I was quickly aware of the probable causes and there were concrete proposal for improvement.” The auditor should be able to say, “I was able to organise my working notes quickly and efficiently and did not need to spend too much time deciding which structure and which formulation to use”.

Of course an audit report should be written clearly, concisely and completely. Yet more important for the decision making is the report format and formulations and how the information is organised. It might not be pretty but it will drive decision making.