RE: Incentives for completing audit findings

[Whitehouse, Don]

Title: RE: Incentives for completing audit findings

Thanks Pankaj,

 

The audit committee actually used the word "penalty" rather than "incentive". Yes, I agree with your assessment of audit finding relevance. We are required to rank each finding from low to very high which deals with materiality and as you can imagine is subjective. However, management questions about the rank of each finding are minimal. Staffing is not likely to change. We do not have any issues where the validity of any reported audit findings are questioned. Our audit processes give us the opportunity to weed out immaterial findings before the audit report is issued. I am confident that our findings are well supported.

 -----Original Message-----
From: Doshi, Pankaj C. [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, July 30, 2002 10:38 AM
To: 'Tracey Sadler'; Whitehouse, Don; [EMAIL PROTECTED]
Subject: RE: Incentives for completing audit findings

I actually have asked management as to why they fail to implement recommendations. It is a worthwhile thing to do directly and clearly, but privately.

Since you are looking for incentive rather than penalty, consider having audit committee or the board offer additional resources. This could be positions, equipment, software, etc. Detail would depend on individual set of circumstances.

Also, this may be a time for a bit of introspection. Are findings truly material and relevant? Are recommendations really practical and cost effective? Did we achieve to convey this clearly? A stronger 'yes' answer will create an inherent incentive for management to follow through, because they will be able to see that it is the right thing to do.

Pankaj C. Doshi
Internal Audit
Department of Transportation
Commonwealth of Virginia
Phone: 804-371-0253

-----Original Message-----
From: Whitehouse, Don [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, July 30, 2002 7:50 AM
To: '[EMAIL PROTECTED]'
Subject: Incentives for completing audit findings

My audit committee has asked that I propose methods to incent management to
complete audit findings in a timely fashon. The audit committee suggested
linking completion of audit findings to performance reviews.

Currently, managers are required to set a target completion date on all
audit findings. These dates and subsequent changes are reported to the audit
committee.

Does anyone have any suggestions or ideas?

Thanks,
Don