The 5 elements of audit finding include: criteria, condition, cause, consequence, and corrective action. Each of these elements is crucial in an audit report because it helps readers understand what the auditor found during the engagement and how the findings may impact the organization.
Criteria: The auditing standards and guidance for internal auditors place great emphasis on making recommendations for corrective actions to resolve audit findings. They are based on the idea that management must be aware of potential weaknesses in operations and make plans to remediate them. Recommendations should be clear, direct, and concise, so that managers can make informed decisions about the appropriate response.
Condition: The auditing standards and guidance for internal audits place great emphasis on identifying and documenting the severity of audit findings. They recommend that auditors describe conditions and their extent so that the reader can gain a more accurate perspective of what the issue is.
Cause: The auditing standards and guidance for internal Auditors place great emphasis on identifying and documenting any weaknesses in the organization’s operations. They suggest that auditors use a systematic approach to determining the causes of deficiencies in the company’s processes and procedures, as well as what management needs to do to address them.
Corrective action is the process of resolving or mitigating audit findings, thereby avoiding future problems. It typically involves a plan of actions and milestones (POA&M) that lists what the organization will do to address audit findings, who is responsible for following up on the progress of each action, and when it will be completed.
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