You just finished typing the last word on the audit report you’ve been working on. It’s a masterpiece. You hit send and hope your client has no problems with it. Unfortunately, they hate every word. And, it’s probably your fault.
Join me this week on
Audit Bites
when we discuss
3 Reasons Clients Can’t Stand Your Audit Reports.
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Transcript
Welcome to audit bites, the show where we give you bite sized chunks of information and education to help you excel in your audit career. Join our host, Robert berry as we tackle another tough auditing topic this week.
Rob Berry:Hey, guys, welcome to episode number three of audit bytes. G
Rob Berry:Three reasons clients hate your audit reports.
Rob Berry:Audit Bites, gives you bite sized chunks of audit discussions and training. It is the first, the very first live show dedicated to auditing. That's right, the very first. Go tell all your friends. And guess what you can get CPE to for being
Rob Berry:Today's topic, 3 Reasons Clients Hate Your Audit Reports.
Rob Berry:Now, you know, I'm willing to bet that some of you are probably thinking hate is a very, very strong word. But think about it like this. You guys go out and perform audit engagements, you come back with what you think is the objective truth. And with
Rob Berry:You've never even thought about that you've blamed the client, you finger pointed, but you've never thought about the quality of your own writing. But I'm going to tell you for some of us our writing, it does, it sucks.
Rob Berry:You see, the problem is many of us were taught writing in an academic setting. And the academic settings are all wrong for the business setting where people bring facts and emotion into the thought process.
Rob Berry:You see, academic writing sometimes requires you to write for the sake of sounding smart. Whereas business writing is done for, well, the sake of solving problems. And that's what your audit reports should be doing.
Rob Berry:So your clients are probably mad at you because your audit reports suck.
Rob Berry:But that's not one of the three reasons we're going to be talking about today.
Rob Berry:Here's what we're going to do today. Today, I'm going to pull an example from a real audit report that I got off the internet just a few months ago. Now I will say I blacked out the name of the organization because my goal is not to shame anyone. My
Rob Berry:So let me just lay the foundation for this report. This report is from an organization that has individuals that are using fuel cards to purchase gas for company vehicles. So that's what this audit was on. The fuel card purchasing process within an
Rob Berry:Alright, so let's dive right in. This issue is number three, finding number three on their report. And it's titled inappropriate fuel purchases. And it reads like this, well, hopefully.
Rob Berry:First, hopefully, you guys can see it on your screen. For those of you watching live on LinkedIn or on YouTube or on my website, thatauditguy.com. Hopefully you can see it. And for those of you listening to it on the podcast, available on your
Rob Berry:Employees purchased the incorrect fuel type in 146 of 35,500 instances during the audit period. See details below. And then there are four bullet points, discussing the 146 times they found something out of 35,500 instances. Now that's pretty
Rob Berry:So I'm going to take a pause right here because we got some of our friends coming in Richard is here. Richard says everyone loves his reports. But see, not everyone is Richard Fowler, though. So I mean, that just stands to reason that everyone loves
Rob Berry:Now Joe is here. Joe says Who doesn't love audit reports with recommendations on how they should do their job. For those of you who don't know, Joe, that is so very sarcastic and funny. I can just see him saying it as I'm reading it. And my man
Rob Berry:Heather, you hit it. Wow, that's a crazy number. Right? Okay, Heather, let's just let's just talk about this number for a minute, right? Let's just dive right into this because they tested 35,500 transactions and found that 146 were wrong. So I
Rob Berry:That came out to be .4%. Not even 1% my friends. Not even half a percent. Point 4%.
Rob Berry:All right. Now Hal. Hal is saying, "I wrote audit reports just like that in the in the 1980s". Right. Right. Hal. Exactly? Now Raven, hey, Raven, how's it going? We need to catch up sometime my friend.
Rob Berry:Raven said, Why even use numbers? Raven I don't know. But with a point 4% error rate, Why even? We'll get to that in just one minute. We'll get to that in just one minute. Now, Joe says wouldn't the wrong gas type ruin the vehicles? Isn't that the
Rob Berry:Man, Joe, you want to finish the show for me, man. I'm gonna step away for a minute and just pull up your comments. Now. I'm just, I'm just kidding. But yeah, all of these things are very valid. And you guys have seen them, just like that. So okay.
Rob Berry:So this is a progress rings on a scale of zero to 100 out of the 35,500 transactions. This is what point 4% looks like from an error rate. Now that looks pretty small. But you know what I thought I said, Okay, well, let's just take a look and see
Rob Berry:we can't expect it to be perfect. So I would probably be satisfied with a point 4% error rate out of 35,500. transactions. So now, let me also say this issue in the audit report, it took up not one, but two pages, almost two and a half pages. Okay, so
Rob Berry:diesel fuel was purchased when the vehicle requires unleaded fuel. Okay. 39 fuel transactions indicate mid grade fuel was purchased. 20 of these transactions were made by one employee, so 20 of the 39. So that means it looks like one employee has
Rob Berry:look a little petty, in my opinion. Okay. But again, that's just my opinion. But wait, there's more to this issue.
Rob Berry:It also says that according to the Pew Your current manual, only regular unleaded fuel or low sulfur diesel fuel is to be used in vehicles, the type of vehicle will determine the fuel type. In addition, the use of the fuel card for anything other
Rob Berry:It also says that the review process for fuel card purchases is not properly functioning, which allows inappropriate fuel purchases to go unnoticed. Now, I think that's a separate issue. That was an issue number one of their reports. So now we're
Rob Berry:be a red flag, but how does that definitive definitively indicate personal use of the card? So now I want to go back to my friends, because you guys are really in the comments here. Hell says, isn't the issue, not the numbers, but the consequence
Rob Berry:cars. I don't know heaven. I mean, did we? Did we definitively say that in the report? I didn't read that in here. Any were? And so poser was asking did the employees fuel their personal vehicles? I don't know. You tell me. Did you read it? I didn't
Rob Berry:audit reports. And that first reason, my friends, oh, wait a minute, let me go to it up. The first reason is you have irrelevant issues. The first thing you have to ask yourself is are the report contents valuable to stakeholders, you see this
Rob Berry:this is kind of akin to, let's say you were in school and you got your report card, and on your report card, you had five A's. Now when I was in school, 92 to 100 was an A. So let's say you got five A's on your report card, and four of those A's
Rob Berry:right reiterate the importance of purchasing the correct fuel type for their vehicle. We also recommend again instituting a better review process for the fuel for the fuel car purchases. We recommend transportation incorporate a simple, not a
Rob Berry:A simple data mining review to check for wrong fuel types. Okay, let's just jump right in here. This brings us to the second reason that clients can't stand your audit reports. That second reason is you have the wrong recommendations. Look, my
Rob Berry:reiterate the importance of purchasing the correct fuel type. That is important because the real risk here is the car could blow up while somebody is in it, and have legal liability. But let me ask a question. With that kind of recommendation. What
Rob Berry:sign a sign in sheet when they come to the training course or or just call me crazy, is a sufficient reminder to have training where they take a test at the end to prove that they actually understood the things that they were being trained on.
Rob Berry:pragmatic. Alright, so let's go back to our audience again, because how I love it when halos around because he brings up excellent points, how said mark your calendar calendars for the repeat yet? irrelevant finding. Now Heather is saying some
Rob Berry:wrong recommendation all together. But I agree with you, Richard, and what you said. Alright, my friends. I'm Robert Barry, you're here with me on audit bites, the first and only live show about auditing. We're talking about why clients hate your
Rob Berry:boot camp. He asked better questions boot camp, if you go to that audit guide comm backslash boot camp. You can see what it is about and getting ready to join our next cohort starting October the fifth team. You heard me right October the 15th. The
Rob Berry:let's go back to this finding for just one moment. Look, guys, there is a point 4% error rate from what I can tell. And for me, I find it odd that that was deemed to be big enough of a problem to dedicate two pages of an audit report to but let's
Rob Berry:report. And let me explain to you what I mean by that. This is akin to the entire class being punished and not getting to go on the field trip because two people acted bad during lunch. Right. So clients hate your audit reports because of irrelevant
Rob Berry:purchasing the correct fuel type for their vehicle, and that personal use of a fuel card is prohibited. We will also improve the review process and communicate it to supervisors by October 1 2021. Now wait, the last time I checked, I thought this was
Rob Berry:exactly what are you going to do? Or should training be provided? This is the part where management spells out what they are going to do, and it needs to be clear, and it needs to be actionable. Now the other problem that I see here, again, if
Rob Berry:the people who did the right thing that actually builds a bad relationship with your audit client. All right, my friends. Let's go back to our audience again, and see what you guys are saying. So pozo is saying the auditors need training.
Rob Berry:Yeah, you're right pose. Oh, and now Joe says, and I'm going to be at the September conference. For the which chapter is it again, Long Island, I'm sorry, do I wasn't gonna make fun of you this time and say New Jersey for the Long Island chapter of
Rob Berry:the risk. And it appears that the auditors didn't start there when deciding what to look at and how how says did the finding ever articulate what the actual risk what No, man it didn't. This and how it says this is compliance work, not risk based
Rob Berry:Raven brings up another point, why bother providing recommendations and management response? Why not just sit down and agree on what needs to happen exactly. And then write it up as an agreed upon action. This saves the auditors and management from
Rob Berry:types. First, that's very condescending, but okay. But the question I would ask here is, what did the auditors use? Did they use a simple data mining review? And if they did, why would you not share some of that with management, there are several
Rob Berry:not be simple to your audit clients. So now what is done is what has happened here is you failed management once again, with the wrong recommendation. All right, my friend. So let's go to the third reason why otter does hate your audit reports. Is
Rob Berry:today we're talking about three reasons why audit clients hate your audit reports. Yes, I said hate. The first reason is you have irrelevant issues. The first question you must ask yourself is, is the report content valuable to your stakeholders? The
Rob Berry:would do? Yes. Issue closed issue addressed? Nope.
Rob Berry:And that my friend is exactly what is going to happen. And so this is why clients hate your audit reports. I know a lot of people said you shouldn't use the H word. It's such a strong word. We have our client and I got this kind of report from you,
Rob Berry:with your audit clients and be more of a helping hand with audit clients. Now because we have a delay here. I'm going to wait just a few seconds to see if anybody else is typing in anything else. Because we've come down to the three reasons why audit
Rob Berry:I'm actually going to have to use that and actually quote you on and I'll give you credit but you won't get paid a royalty for it. So again, my friends, this is our it bites. I am Robert Berry. This is episode number three. We are also available on
Rob Berry:Thank you for joining us on this episode of audit flights. If you want to do more, see more, be more, check out our website that areca.com where you will find quality training, audit merge. Yes, we have had shirts and other apparel as well as pairs