Dear all, please guide in light of the international best practices that:- 1- Whether auditors should share audit ratings or not to auditee's Sr. management for their prior concurrence/feedback before issuance of final ratings in final audit reports? 2- Would this action will impair the independence of the auditors or not?
As I don't find any solution in PG on Formulating and Expressing Internal Audit Opinions and PG on Independence and Objectivity.
We review our report drafts with management prior to issuance. We don’t give an overall rating, but we do rate individual findings (on a low-medium-high scale). We discuss with management how we arrived at the rating. The rating drives how high up the issue goes (low-rated issues only go management of the area, medium and high issues go to senior management and the audit committee). I don’t see how this impairs my independence in any way. If management disagrees with my opinion, you can be sure they will say something. While I assign the rating, I have to defend my reasoning. If management has another perspective, they have to defend that as well. It’s much better for everyone to go through that process prior to issuing a final report than afterward. This is just part of the normal audit reporting process.
I believe it is a good practice to engage management discussion regarding concurrence with risk ratings.
Just as we review findings with management, we should also review/discuss ratings. Sometimes, management has valid points regarding why a rating shoud be lower.
Objectivity is not impaired by listening to management, as long as you don't lower a rating simply because management wants it lowered. If they have a valid argument that it should be lower, and you buy into that, it is simpy a good practice to be flexible.