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The "Write" Stuff
Strengthen your audit documentation and business communications skills!
Auditors are relied upon for their ability to analyze and audit financial statements and footnote disclosures, but equally as important is their ability to write — and communicate — effectively. Whether it’s preparing audit documentation or replying to a client’s email, the ability to communicate accurately and clearly is key. When performing an audit of financial statements are involved, written proof is always critical, so it’s imperative to be able to communicate these matters in a concise and articulate way in order to satisfy Professional Standards, regulators and standard-setters.
Here are some tips to add polish to two common types of communications auditors use:
The ABCs of Audit Documentation
For auditors, being able to draft audit documentation that can stand on its own without any verbal explanation by the engagement team is the goal. Prepare audit documentation sufficient to enable an “experienced auditor” who has no previous connection with the engagement to understand the nature, timing and extent of the auditing procedures performed, the results of audit procedures and evidence obtained and the significant judgments made and conclusions reached on significant findings or issues. Well-written audit workpaper documentation can be a great asset in enhancing audit quality as well as helping audit engagement teams plan and perform their audits, enable them to demonstrate accountability for their work, and will serve as a record of matters of continuing significance to future audits of the same entry. For each required audit procedure, auditors should document:
- Identifying characteristics of specific items tested
- Who performed and date of performance
- Who reviewed and date/extent of review
Here are some important tips to follow:
Time is of the essence. Documentation should be prepared on a timely basis. The longer you wait, the less information you will be able to recall.
Don’t over-write. Can you have too much audit documentation? Actually yes; it’s very common. Don’t overburden the engagement partner, engagement quality control reviewer, peer reviewer, regulators, standard-setters and others with items that do not support material transactions and testing procedures. And be sure to remove superseded workpapers, open items listings, and items in the trash folder.
Include these essential items. Ensure that your audit workpaper documentation includes:
- Overall responses to address the assessed risks of misstatement at the financial statement level
- Nature, timing, and extent of further audit procedures
- Linkage of procedures with the assessed risks at the relevant assertion level
- Results of those audit procedures
- Conclusions reached by team
- Significant issues, findings, and judgments
- Nature of findings or issues discussed
- When and with whom discussions took place
- Document how inconsistencies were addressed
Be mindful of legal considerations. Avoid including commentary or information that could call the audit into question. For instance, do not make extraneous remarks (example: “This client’s books are a mess!”) or statements that may discredit your work (example: “Close enough for government work!”).
Retention of work papers. In keeping with Professional Standards, workpapers for audits of privately-held companies should be retained for a minimum of five years from the report release date.
Crafting Better Emails
As the most common method of quick communication between auditors & CPAs and clients, emails are often used to respond to requests, ask a quick question or quickly summarize an attachment. The most important thing to remember when writing an email is that people are busy and may receive hundreds of emails. The key to writing an effective email is to tell recipients only what they need to know in as short a manner as possible.
A general rule of thumb is to use the inverted pyramid principle of putting the most important things at the top so they won’t get missed. If you have to write more than a paragraph, consider using bullet points so that the reader can move quickly through the text. To make things easy for the reader, use a strong, descriptive subject line (example: “Filing deadline for the financial statements is October 15th” or “Quick question about your footnote disclosure”) so that the reader understands the importance of the content.
Finally, don’t try to cover too much in one email; you may confuse and overwhelm the recipient. If you find that the email is getting too lengthy, consider cutting it into smaller topic-based emails that get sent to the client at staggered dates. Most importantly, remember that emails become official documents that may be referenced at a later date. With that in mind, pick up the phone if you want to share highly confidential or sensitive information.
Need more help? Invest in your professional development by taking a professional writing course tailored toward auditors and CPAs.
It’s important to remember that the world of accounting and auditing can be daunting for outsiders — even for professional staff with years of experience. As an auditor, you can bridge this gap by ensuring your communications are clear and to the point. Your clients will appreciate that as much as they value your analytical and technical skills.
Collemi Consulting leverages nearly three decades of experience to provide trusted technical accounting and auditing expertise when you need it the most. We regularly work with CPA firm leadership to help them reduce risk and maximize efficiencies. To schedule an appointment, contact us at (732) 792-6101.
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