---
sourceDocument: Australia Governance, Risk, and Compliance
sourceDocumentLink: https://servicenow-prod.fluidtopics.net/r/governance-risk-compliance

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    - australia

ft:locale :

    - en-US

ft:publication_title :

    - Australia Governance, Risk, and Compliance

ft:clusterId :

    - grc

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---

# Audit observations in Audit

# Audit observations in Audit Workspace {#ariaid-title1}

* Release version: Australia
* 
* Updated March 12, 2026
* 
* ![](https://www.servicenow.com/docs/portal-asset/ico-clock) 2 minutes to read

Summarize  
![AI sparkle icon](https://servicenow.com/docs/portal-asset/ai-sparkle-icon) Summarized using AI  
This content was generated using new OpenAI-powered functionality. Results are provided on an as is basis and are not guaranteed to be accurate or complete.  

## Summary of Audit Observations in Audit Workspace

Audit observations are crucial components of an audit report, capturing significant issues identified during reviews, analyses, and discussions.
These observations highlight how operations meet audit criteria and are documented throughout the audit process, including control testing and interviews.
They are only created when engagements are not in Follow Up or Closed states.
Show full answer Show less  

## Key Features

* **Creation and Management:** Audit users can create observations from engagements or various audit tasks. The observation lifecycle includes states such as Draft, Review, Finalize, and Closed.
* **Roles:** The observation creator assigns respondents (entity and control owners) and peer reviewers (auditors and audit leads) to manage the observation effectively.
* **Peer Review Process:** Upon requesting a peer review, notifications are sent to peer reviewers, who can access the task through their pending tasks. The observation remains in Draft state until peer review feedback is provided.
* **Review by Supervisors:** Reviewers, typically audit supervisors or leads, can request revisions or responses from respondents, facilitating thorough evaluation before finalization.

## Key Outcomes

By systematically documenting and reviewing audit observations, auditors can present a summarized account of issues, discoveries, and recommendations to supervisors. This process ensures that reportable issues are tracked and categorized appropriately, leading to informed decision-making and continuous improvement within the audit framework.  
Audit observations are the results of an audit. As an important part of the audit
report, audit observations represent the results of reviews, analysis, interviews, and
discussions.

## Overview of an audit observation {#observations-audit-ws__section_fhs_zzd_tqb}

Audit observations are used to bring significant issues to the attention of audit supervisors.
Observations are logged in the system. For example, if a bank's operations are being audited,
then the audit observations are based on evidence about how the bank's operations perform
against the audit criteria. During control testing, interviews, and walkthroughs, audit
observations are recorded. An audit user can create an observation from an engagement if the
engagement is not in the Follow Up or Closed
states. An observation can also be created from all types of audit tasks.

After the auditor completes the audit, the auditor then presents the audit observations to the
audit supervisors. By using the audit observations, the auditor can present a summary of
problems, discoveries, and recommendations. The audit team reviews the observations to determine
if the observation is a reportable issue. The audit team can also determine if the observation
can be tracked as a recommendation, an observation, or a best practice.  
In its life cycle, an audit observation moves through the following states:

1. Draft
2. Review
3. Respond
4. Finalize
5. Closed
{#observations-audit-ws__ol_grh_hmy_sqb}

## Status workflow of an audit observation in workspace {#observations-audit-ws__section_s12_kmy_sqb}

1. An audit user with the role sn_audit.user creates an observation. See [Create an observation for an
   engagement](https://servicenow-prod.fluidtopics.net/YCjKkFeISqbXOy1muzJh5w "Create an audit observation to present a summary of problems, discoveries, and recommendations. The audit team can then review the observations to determine if the observation is a reportable issue.").
   1. To create an observation, navigate to AllAuditAudit Workspace.
   2. Click the lists icon (![List icon.]()).
   3. Click All engagements or My engagements in the Execution list.
   4. Click the link to the engagement record in the Name column.
   5. Click the Observations tab.
   6. Click New.
   7. On the Create New Observation form, fill in the fields.
   {#observations-audit-ws__ul_mxh_f35_tqb}
2. The observation creator assigns respondents and peer reviewers to the observation. The respondents are the entity owners and control owners. The peer reviewers are the auditors and audit leads of the engagement.
3. The observation creator can request a peer review of the observation. In that case, the following happens:
   1. The peer reviewer gets a notification to perform the peer review. The peer reviewer can view the task under My pending tasksAll by clicking the tasks icon (![Tasks icon]()) in the workspace.  
      Note:  
      The peer reviewer can also navigate to TasksMy tasksOpen in the Home page of the workspace.
   2. The peer reviewer completes the review.

   {#observations-audit-ws__ol_j54_pmy_sqb}  
   Note:  
   When a peer review is requested, the state remains as Draft but the substate changes to Peer review requested.
4. The observation creator can also request a review. The reviewer can be an audit supervisor or the audit lead.
   1. The reviewer gets a notification to perform the review. The reviewer can view the task by navigating to My pending tasksAllObservations.
   2. The reviewer can either request a revision of the observation or request a response from the respondent. The reviewer can also provide feedback in the Results section by selecting the appropriate option.
   {#observations-audit-ws__ol_k54_pmy_sqb}
5. If the reviewer requested a response from the respondent, then the respondent responds to the observation by navigating to AuditObservationsMy Pending Response.
6. The observation moves to the Finalize state.
7. The observation is closed and an issue is created.
{#observations-audit-ws__ol_i54_pmy_sqb}

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