Auditee reporting responsibilities


Auditee reporting responsibilities

In the event that an auditor makes a finding, the auditee has important reporting responsibilities during the year of the finding and in subsequent years. The auditee is required to form an audit committee of the company’s board whose mandate is to receive audit reports, analyze the reports, give an opinion and demand implementation of the findings (Mohamed & Hussain, 2005). The audit committee of the board assesses the legal and other implications of the finding to the company and its stakeholders. Once the finding is isolated in an audit committee of the auditee’s board, the board is required to circulate the audit report to senior managers who then cascade it to line managers to note the finding and take necessary steps to make any changes that may be deemed necessary (Kintzele, Arndt, Kintzele & Kwiatkowski, 2008).

The auditee should ensure that the finding is included in an audit report which is clear and meaningful for it to generate the desired response from the stakeholders.   The auditee must ensure the report from the auditors does not just give information on the finding alone but must be holistic and progressive in nature by including additional information that assist the readers to appreciate it.  The auditee must ensure that the auditor’s report includes information touching on the purpose of the audit (Kintzele, Arndt, Kintzele & Kwiatkowski, 2008). Information on why the audit that made the finding was undertaken should be provided. This will help the board committee, senior managers and line managers who are tasked with implementing the audit finding to understand the context of the finding. The auditee must also ensure the report includes the scope of the audit undertaken (Kintzele, Arndt, Kintzele & Kwiatkowski, 2008). This will assist line managers to determine whether all matters that influenced the finding were covered. This assists the affected persons to be objective in assessing the finding. The audit report must also provide results of the audit exercise as this will assist the line managers to appreciate the exercise and its impact on the organization.  The audit report that the auditee circulates must also include recommendations on addressing the finding. It will be unprofessional for the auditee to circulate a report or to expose a finding without providing the way forward on addressing the finding. This step ensures a proactive way of addressing issues affecting a company (Terrell & Reed, 2003).

The auditee must also read past audit reports on the finding and provide any information relating to it to assist management in addressing the audit issue identified. The auditee should also give an opinion on the audit finding that will guide the line manager in making changes on issues that the finding wants addressed (Terrell & Reed, 2003).  An evaluation of the effects of the finding should be provided by the auditor clearly showing the long term consequences of the finding on the company and its stakeholders. If the information is not provided it will affect the urgency with which management will address the matter.  On that particular year when the finding is noted, the auditee must ensure the finding is reported in the annual financial statements to enable stock holders make informed decisions (Terrell & Reed, 2003).  On subsequent years the auditee must ensure the audit report that contains the finding is consistent with other reports filed in previous years (Hubbard, 2001). Lack of consistency impairs the ability of the company to draw comparisons with past findings and understand how related findings they were addressed. This will assist the auditee in improving its operational processes and identifying risky processes that may raise audit issues.  The auditee should also keep a library of issued audit reports as examples of audit reports undertaken. This will help managers to peruse through and identify risk areas that were identified and how they were mitigated. This will also assist managers to be proactive in solving problems in their daily operational activities (Hubbard, 2001).


Hubbard, L. D. (2001). Audit reporting 101. The Internal Auditor, 58(6), 21-23. Retrieved from

Kintzele, P. L., Arndt, T. L., Kintzele, M. R., & Kwiatkowski, V. E. (2008). AUDIT COMMITTEES AND INTERNAL AUDITORS: THEIR ROLES IN FINANCIAL REPORTING TODAY. Internal Auditing, 23(3), 30-37. Retrieved from

Mohamed, E., & Hussain, M. M. (2005). The role of audit committees in enhancing a transparent corporate reporting. Humanomics, 21(1), 30-47. Retrieved from

Terrell, M. C., & Reed, S. A. (2003). Financial reporting risks should drive audit committee

agenda.   Directorship, 29(11), 18-20. Retrieved from


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