The audit is completed and the report has been issued, your work schedule has somewhat normalized and you can finally breathe - well until you receive the invitation to attend the audit committee meeting during which the audit results will be presented to the members of the board. As the auditee, your responsibilities within the audit process do not fully end until the final audit report is presented to the audit committee assuming your organization operates at a level and within a regulatory framework where an audit committee is required.

Having been both an auditor and auditee, I have had an opportunity to participate in specific sections of audit committee meetings where the agenda was Approval of Audit Reports and have gathered a handful of helpful tips on how to put your best foot forward if called upon. 

In your role as the auditee, you will primarily be answering questions that the committee members have on the audit findings and providing an additional context as appropriate. This is not the time to dispute the findings. Any disagreements with the auditors on audit findings should have been resolved before the final report was issued. At this stage, your responses should focus on specific corrective actions that have been taken since the findings were discovered and whether the findings have been resolved.

To this end, aside from polishing up your presentation skills, completely absorbing the material on the audit findings, figuring out the controls on the Public Address System, and calming your nerves if you are like me, your preparation should encompass the following:

• Implement Corrective Actions

As noted earlier, your presentation should demonstrate to the audit committee the specific actions taken since the discovery of the audit findings. Audit findings reveal weaknesses and potential risk areas within the organization and this can become a concern if your responses do not convey responsibility, accountability, and decisive action to mitigate the risks identified.

Your responses will be better received by the committee members if you can demonstrate with evidence that the audit findings under discussion have been resolved. Take specific steps way in advance of the audit committee meeting to resolve the findings to the extent within your control. You can score additional points here if the organization knew about the issue before it became an audit finding and had already begun taking steps to resolve it.

Taking a defensive or hostile approach instead of implementing corrective actions where possible is not recommended in your position as the auditee. This is because all disagreements over the findings are expected to be fully resolved with the auditors before the audit report is finalized.

If you have been unable to implement any corrective action, then you may discuss the specific steps you intend to take to resolve the findings. Either way, your best defense is to get ahead of the findings.

• Consult with the auditors

 The audit report is usually shared with the audit committee members as a pre-read to facilitate discussions during the meeting. Preparing ahead of time is also helpful because the time allotted to the committee members for the review and approval of the audit report may be limited. 

If you are invited to an audit committee meeting, first review the agenda and determine, based on the audit results shared with you at the end of the audit, if the time allotted to the auditors to present their findings is generous. A relatively short time means the auditors will need to focus their presentation only on the material findings and salient points and delve into the other issues if there is time.

If this is the case, then, depending on the flexibility of your auditors and nature of your relationship, you may be able to confirm with them which aspects of the audit findings they intend to prioritize and focus your preparation efforts more heavily on those. 

This can more easily be done with internal auditors as the expectation is that there is more open and frequent communication throughout the audit process. However, if you have cordial and professional relationships with your external auditors, then to the extent that the independence and ethics standards permit, they may be open to sharing certain non-confidential aspects of their presentation with you to facilitate your preparation.

• Confer with your superiors

If you are appearing before the audit committee, chances are you are already at the top management level and can exercise sound judgment regarding what needs to be shared with the committee in your presentation. However, you can reduce the chances of inadvertently revealing information that will rather be withheld for the moment if you run your planned responses by your superiors including the CEO. 

The CEO and other C-Level executives may choose to withhold information for several reasons including: 

• Not having full knowledge of a situation that may still be evolving;
• The need to assess the potential impact of the issue on other areas of the business; and
• The time needed to determine or implement an appropriate action plan.

For these reasons, if you anticipate that your planned responses could potentially open a can of worms, do well to confer with the appropriate people beforehand. Another reason why this is important is that the executives become more invested in your session and are better able to offer support if needed during your question and answer session. Finally, they could provide additional insights on the audit findings which can enhance your responses.

• Master the details and numbers

Since you are after all attending the meeting to answer questions on the audit finding, you should devote a generous amount of time to understanding the audit findings and brainstorming possible questions that may be asked by a reasonable third party with knowledge of your business but without knowledge of the audit finding.

Audit findings with relatively high monetary values tend to get more attention than those which are purely qualitative in nature. Therefore if there is an amount involved, understand as much as possible about it including the amount in question, how the figure was arrived at, causes of the anomaly (system-related, human error or fraud), its impact on other account balances, its status (paid, recovered or written off as appropriate) and regulatory, reporting or disclosure implications, etc.

Do not ignore qualitative findings as they can also be heavily interrogated if they relate to key operational and regulatory areas. Understand the cause, potential impact, underlying risk exposure and plans to implement corrective actions that mitigate the risks identified.

• Identify potential opportunities in the interaction ahead

It is possible to focus on the daunting nature of this kind of interaction with the audit committee and miss the opportunity to appeal directly to members of the board who can directly influence key decisions within the organization. Members of the audit committee could also be members of other committees of the board of directors and any well-crafted appeals you make could find their way before the relevant people to reinforce the need for action on previously tabled issues.

This is key because certain audit findings result from a lack of action from the Board of Directors on key issues. Examples of such actions include approving budgets for certain projects, approving headcount within certain departments, seeking or providing regulatory guidance, etc. If any of your audit findings fall in this category, then you are in luck. With the blessing of your superiors of course, after you share your implemented or planned course of action for the finding, tactfully solicit support from the Board of Directors for actions the organization may be waiting on to close the finding.

In addition to the points noted above, it may be helpful for you to gain some insights into how auditors engage with the audit committee to aid your preparation.

 Leave a comment and share how your presentations have gone in the past and what you plan to do differently as a result of this post. I would also like to know how your preparation differs from the tips shared in this post.