budgetary constraints for the development of new systems), CAPs may be implemented even beyond six months or years after the finding was discovered. Further, depending on the nature of the finding and the resources required (e.g. This is important because most CAPs are typically planned to be implemented between one to six months of identifying the audit finding. If there has been a considerable time lag between the initial development of the CAP and its implementation, you need to identify the underlying risk associated with the audit finding and determine whether the corrective action plan drafted in response to the risk exposure is still relevant. Determine whether the CAP is still relevant.If the audit finding lends itself to resolution by corrective action planning, then the following steps will be helpful in ensuring that the risks which underlie the finding are mitigated and repeat audit findings are minimized. Resolving findings with Corrective Action Plans In that scenario, the adjustment will need to be passed regardless of any risk assessment performed to ensure that the financial statements are fairly stated. I should mention here that the corrective action planning process does not necessarily cover audit findings which require an adjustment to be passed e.g. The second is to eliminate or revise the offending control activity to the extent that there are compensating controls in place to address the core risk(s). The first is to accept the risk underlying the audit finding and its associated impact. If you choose not to implement a CAP however, there are two options to close the audit finding. The most effective way to resolve an audit finding is by implementing a Corrective Action Plan (CAP) which address the underlying risk(s) associated with the audit finding. A weak internal control system reduces the reliance placed on it by auditors in future audits and assessments and increases the level of substantive testing which invariably leads back to repeat findings and strains resources during audits. The auditee’s reply may well provide additional audit evidence that was not available to or understood by the audit team when it initially formulated the finding.Unresolved audit findings often lead to repeat audit findings which call into question the strength of your organization’s internal control system. The findings are communicated to the auditee, whose written response is required, providing confirmation that the facts and findings are accurate or indicating reasons for disagreement. Constructive discussion of initial findings with the auditee helps to establish the quantity and quality of evidence. Active dialogue should be maintained with the auditee and potential audit findings discussed as and when they arise to take into account different arguments and perspectives. Performance audits should focus on providing a balanced view of the topic, presenting not only deficiencies but also, when appropriate, positive findings and indications of good practice or corrective action already taken. However, qualitative effects, as evidenced in a lack of control, poor decisions or a lack of concern for service, will also be significant and need to be considered. expensive inputs or processes, unproductive facilities, time delays. In many cases, the effect of a finding may be quantifiable, e.g. The team needs to identify the cause of the deficiency and assess its potential effect. Discussing the matter with auditee management may be necessary so as to determine whether the problem can be addressed by the auditee or is outside its control. The team needs to determine auditee management's awareness of the issue if management is aware of the problem and already taking corrective action, this needs to be recorded and taken into consideration for reporting purposes. The assessment must be clearly reflected in the wording of the finding, with qualifying words (e.g. The team must assess the degree of confidence in the audit finding, based upon the strength of the evidence. Determining whether the deficiency is an isolated instance or represents a systematic problem may require gathering additional evidence. Where performance does not meet the criteria, further investigation is needed to gain assurance that any resultant audit findings and conclusions are significant, fair and well-founded. Instructions The audit team uses the information gathered to make an objective assessment of actual performance against the audit criteria. impact/effect in terms of economy, efficiency and effectiveness.analysis of the nature, significance, and cause of the problem or the better-than-expected performance (in the interest of having a balanced view) and.a fact includes also cause, materiality, source and extent of evidence
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