Audit observations in Audit Workspace

  • Release version: Yokohama
  • Updated January 30, 2025
  • 2 minutes to read
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    Summary of Audit observations in Audit Workspace

    Audit observations represent the documented results of an audit, including significant issues identified through reviews, analysis, interviews, and discussions. These observations are critical for highlighting findings to audit supervisors and are based on evidence gathered during audits, such as control testing and walkthroughs. They help auditors summarize problems, discoveries, and recommendations, and assist the audit team in deciding whether an observation should be reported as an issue, tracked as a recommendation, or noted as a best practice.

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    Working with Audit Observations

    Audit observations are created within the Audit Workspace by users holding the snaudit.user role. Observations can be added from engagements that are not in the Follow Up or Closed states, as well as from various audit tasks. The creation process involves:

    • Navigating to the Audit Workspace and selecting the relevant engagement.
    • Accessing the Observations tab and filling out the observation details.
    • Assigning respondents (entity and control owners) and peer reviewers (auditors and audit leads).

    Review and Approval Process

    The observation lifecycle includes the following states: Draft, Review, Respond, Finalize, and Closed.

    • Peer Review: The creator can request a peer review, prompting notifications to peer reviewers who track the task via the workspace's pending tasks. During peer review, the observation remains in Draft state but with a substate of Peer review requested.
    • Audit Supervisor or Lead Review: A reviewer can request revisions or responses from respondents and provide feedback through the Results section.
    • Respondent Action: Respondents address review requests by responding to observations via their pending responses list.

    Finalization and Closure

    Once reviews and responses are completed, the observation moves to the Finalize state and subsequently to Closed, where it may result in the creation of an issue for tracking. This structured workflow ensures audit observations are thoroughly vetted, documented, and addressed within the audit process.

    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.