Audit reports are a valuable tool to evaluate auditor performance, identify operational problem areas and reassure company stakeholders of the company's position. When evaluating your audit report, it's valuable to reflect on the entire audit experience. Conduct a debriefing session with your staff to discuss the auditor's timeliness, communication skills and overall auditing knowledge. If you're unhappy with the auditor's performance, you can issue a request for proposal to meet new potential auditors.

Check for Completeness

The audit report and working papers describe what areas of the company the auditors audited. Check these documents to ensure that the auditors audited all necessary subject areas. External auditors generally audit all financial statement accounts, including doing physical checks of inventory and other assets. External auditors don't need to evaluate every transaction, but they should use a sampling methodology that promotes sufficient evidence collection. Internal auditors and information technology auditors focus on the security of the information system and the reliability of the software. Make sure that internal auditors examined all current software applications used by accounting staff.

Evaluate and Respond to Findings

External auditors will issue an opinion in the audit report expressing whether or not they believe the financial statements are fairly presented. They also may present findings on other matters, such as noncompliance with legal regulations that could affect the financial statements. Evaluate the validity of the findings and craft a management response to each recommendation. If you agree with the audit findings, state this in the response and document your intent to resolve the problem. If you strongly disagree with the auditor's findings, mention your central points of reasoning in the response.

Implement Recommendations

If the audit report mentioned problem areas, create a plan to implement changes. It's helpful to ask your auditor how she would address the issue. Auditors typically do not implement solutions on behalf of the client but they can walk you through the pros and cons of a variety of operational strategies. The best solutions are cost conscious, realistic and easy to implement quickly. The sooner you implement changes, the better chance the company has of decreasing audit costs for the next year and obtaining a clean audit opinion.

Retain for Stakeholders

Both external and internal audit reports are useful tools for external management. However, company stakeholders such as banks, investors, and potential business partners make up the main audience for external audit reports. An audit is a way to show the world that the company financial position is what management purports it to be. Provide a copy of your audit reports to any potential lender; it might make him more willing to transact the loan and offer a lower interest rate.