Audit observations in Audit Workspace

  • Release version: Xanadu
  • Updated August 1, 2024
  • 2 minutes to read
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    Summary of Audit Observations in Audit Workspace

    Audit observations are critical outcomes from an audit, reflecting the results of reviews, analyses, and discussions. They highlight significant issues for audit supervisors and are logged in the system based on evidence from audit criteria. Observations are created during control testing, interviews, and walkthroughs, facilitating the communication of problems, discoveries, and recommendations to the audit team.

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    Key Features

    • Observations can be created from engagements that are not in Follow Up or Closed states.
    • Users with the role snaudit.user can create observations via the Audit Workspace.
    • The observation life cycle includes the states: Draft, Review, Respond, Finalize, and Closed.
    • Observation creators can assign respondents and peer reviewers to each observation.
    • Notifications are sent to peer reviewers and supervisors for reviews and feedback.

    Key Outcomes

    By utilizing audit observations, auditors can effectively summarize issues for further review. The audit team assesses each observation to decide if it merits reporting or tracking as a recommendation or best practice. Following the completion of the review process, observations lead to actionable insights and the creation of issues if necessary.

    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

    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

    Status workflow of an audit observation in workspace

    1. An audit user with the role sn_audit.user creates an observation. See Create an observation for an engagement.
      1. To create an observation, navigate to All > Audit > Audit 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.
    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 tasks > All by clicking the tasks icon (Tasks icon) in the workspace.
        Note:
        The peer reviewer can also navigate to Tasks > My tasks > Open in the Home page of the workspace.
      2. The peer reviewer completes the review.
      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 tasks > All > Observations.
      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.
    5. If the reviewer requested a response from the respondent, then the respondent responds to the observation by navigating to Audit > Observations > My Pending Response.
    6. The observation moves to the Finalize state.
    7. The observation is closed and an issue is created.