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Module 4 Reviewer

This document discusses the engagement communication phase of an internal audit. It outlines activities like performing observations and escalations, conducting interim and preliminary communications, and developing final communications that can provide negative or positive assurance. The document also describes using a CCCER/5C model to document audit findings by specifying criteria, condition, cause, effect, and recommendations. Additionally, it discusses different levels of persuasive evidence and the importance of internal audit resolution and follow-up.

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Lorence Ibañez
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23 views

Module 4 Reviewer

This document discusses the engagement communication phase of an internal audit. It outlines activities like performing observations and escalations, conducting interim and preliminary communications, and developing final communications that can provide negative or positive assurance. The document also describes using a CCCER/5C model to document audit findings by specifying criteria, condition, cause, effect, and recommendations. Additionally, it discusses different levels of persuasive evidence and the importance of internal audit resolution and follow-up.

Uploaded by

Lorence Ibañez
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module 4 - Engagement Communication Phase

● Engagement Communication Activities

○ Perform observation evaluation and escalation process


■ communications throughout an organization (with boundaries)
○ Conduct interim and preliminary engagement communications.
■ internal audit communications occur throughout the engagement, not just
at the end.
○ Develop final engagement communications
■ Negative assurance - Internal auditors express negative assurance
when they conclude that nothing has come to their attention that indicates
that the auditee’s controls are designed inadequately or operating
ineffectively.
■ Positive assurance - Internal auditors express positive assurance when
they conclude that, in their opinion, the auditee’s controls are designed
adequately and operating effectively.
○ Distribute formal and informal communications
■ Informal - less significant observations
■ The purpose represents the engagement objectives, that is, why the
engagement was conducted and what it was expected to achieve.
■ The scope defines the activities included in the engagement, the nature
and extent of work performed, and the time period covered. The scope
also may identify related activities not included in the engagement, if
necessary, to delineate the boundaries of the engagement.
■ Results include observations, conclusions, opinions, recommendations,
and action plans.
○ Perform monitoring and follow up procedures

● Using the CCCER/5C Model to Document Findings

● Criteria - performance standards or expectations; what should be in place


● Condition - refers to what the auditor discovered as a result of applying auditing
procedures; what is in place
○ Note: Findings exist because there’s a difference between criteria and the
condition
● Cause - is the reason the condition exists.; “why” there is a difference between
expected and actual conditions; finding root cause
● Effect - constitutes the consequence of the condition identified; relates to the risk
● Recommendation - is the action or collection of actions; timely, useful,
relevant, and feasible recommendations.
○ Note: Findings and recommendations should be persuasive

● Levels of Persuasive Evidence


○ Level 1: Physical Examination
○ Level 2: Observation
○ Level 3: Third party
○ Level 4: Client

● Usefulness Internal Audit Resolution and Follow-Up


○ Internal audit follow-up of its recommendations is one of the most important
stages of any audit that should not be neglected or incorrectly implemented.
If the internal audit fails to make sure that its recommendations are
implemented, then all of the investment in doing the audit may be wasted.

○ There are three main ways of following-up an audit, namely:


■ By letter asking the auditee to confirm action has been taken
■ Scheduling a specific follow-up audit
■ Follow-up as part of the next audit

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