So does the adoption of a positivist, scientific, approach or idealist approach to audit, affect report-writing process and output style? Well, yes.
Think back to your school days when you wrote up your science experiments. They were big on method and data and short on narrative and description. The overall length of the report was shorter, the tone was terse and the overall report was strong on structure. The content of the report is different. It deals with fact. Right. Wrong.
Then think about your creative writing. It was unstructured, low on data, big on prose, with a narrative that described and made sense of the subject being presented. There is no sense of right or wrong, just how the characters and viewpoint of the narrative see things.
So when I think about the audit world, why then do we see reports that only or predominantly apply the positivist, scientific method. Is it because internal audit has a history of emerging from operational control and compliance processes? At this level perhaps right and wrong do exist (or at least as defined by the control framework’s rules). Perhaps here it does make sense to report and rank exceptions and to describe these in a terse, objective manner.
Yet the demands of good audit committee members is changing. They want the ‘right’ answer but to bigger, strategic questions. Does the old style of mechanical reporting make sense still? I think not. If we think about an audit report to consider a more strategic question, then would an idealist style of narrative reporting work. Well again I think not. An idealist report would include narrative, probably not provide a conclusion and would not generate a structure beyond the overall narrative. I suspect most audit committee members would be unwilling to engage with a narrative style that required a small novel to be read for each meeting.
So is there an answer in-between? Yes, I think so. The realist approach considers truth to be objective. It accepts that there is a right answer, but that people have different perceptions of it. So in an audit sense the report’s job is to present a narrative that talks about different understandings of the facts, yet provides an argument that a specific understanding is, materially, right.
Thus when my clients in my early part of the career asked for ‘context’ to be put in the report, it was not a vain attempt to appear better in front of the Audit Committee and their bosses, but really an attempt to show that the same ‘facts’ have more than one possible interpretation. This learning can be added into the report-writing mix. In particular it could be used to provide reports that understand our human need to understand, but accept that the world is complex. In a sense, should audit reports not be more consultancy-like in their format? They often use diagrams, colour, narrative, data and text to present an argument. In my view internal audit reports present a researched and evidence-based argument for the assurance opinion provided.
I still like a structure to audit reports. I like to assess issues or risks on a prioritised basis. Yet I want to have the space to make a narrative argument. Perhaps we, as a profession, should re-imagine the audit report from a realist perspective? The social world is messy and untidy and audit reports should impose order and structure to it, yet they should not pretend it is simple or artificially less complex. In my experience, the quality of audit committee members has got better and better over my career and I have had the pleasure of working with some great audit committee members. I think they can cope with knowledge that the world is complex and that complex questions do not have simple answers. Is it not wrong of us to pretend otherwise?
So is it time to take a step back from your audit reporting? What approach underpins your style?