Communication of Information in Audit Reports
2.1.2 Communication of Information in Audit Reports
How auditors communicate information in audit reports tothe stakeholders is also a part of assessing the quality of information. It is necessary that the audit reports of an audit institution meet three criteria, namely: (1) they are communicated clearly and understandably, (2) they have precise and informative formatting, and (3) they are timely. The following sections discuss further each indicator in communicating audit information.
Understandable Information with Precise and Informative Formatting
It is essential to report audit findings in a meaningful way that is widely understood. Brown (1980: 264) indicated thatschool of public administration can provide learning about the development of public sector audit that can help students and the community to understand the role of public sector auditing in examining government performance. In addition, Soedibyo (2003: 22-24) believed that the inadequacy of auditors to communicate their findings orally or in writing has had a strong influence on the effectiveness of government auditing, because if an audit report does not communicate its results effectively, then most likely it will not achieve its aims.
Skaerbaek (2005: 387-388) believed that reportscan be a means of presenting information to others. He argued that innovative reports with an elegant layout on glossy paper, a multitude of pictures, fancy pie charts, and complete with short appealingly written stories of the most essential content, can impressParliament. Besides, he underlines that reports producing numbers without much meaning for practical purposes are not considering the needs of different users from internal and external organisations.
Good quality communication and interaction orally or in writing between auditors and the audit committee will prevent misunderstanding between auditors and auditees (Krishnamoorthy et al. 2002:3-13). Bakti (2000a: 21) argued that in Indonesian, it is important to consider the culture of community in communication. He suggested using more sound communication concepts to encourage individual community Members to promote democracy and understanding. Thus, if the auditors do not communicate well, this may cause a lack of commitment by the auditees to the findings and recommendations of the audit report.
Russell and Regel (2000: 14-16) believed that ―the audit reports should be ‗user- friendly‘, so readers can easily understand what is being reported.‖ They provide tips for
auditors to provide more user-friendly audit reports: use terminology that the user will understand, avoid acronyms when possible, be direct and to the point, use a standard format that may improve communication with auditees, and define unfamiliar or technical terms used in the audit report. The basic requirement for a clear and user-friendly audit report is that the users will understand the report. This is indicated by not having too many questions on the reports.
Timely Reporting of Information
A timely report of external public sector auditors to Members of Parliament and Ministers is essential in communicating audit findings. Scanlan (1998: 54-55) argued that the timely nature of reports to Parliament is the most real and concrete result of audit work as an early warning for stakeholders to put further attention and scrutiny on unnoticed issues in accountability and performance of the public sector. Similarly, Schwartz and Mayne (2005: 173) and Santiso (2008:67-84) believed that timeliness of the audit report‘s distribution to the users is one indicator by which to assess the effectiveness of audits.
Firth et.al. (2009: 118-132) revealed that timeliness in disseminating sanction and enforcement information leads to higher transparency and provides up to date information for regulatory agencies in other parts of the world. This is also applied in the case of the timeliness of audit findings and results. If auditors do not publicly announce the report to stakeholders on time, the audit reports may not be used effectively (Soedibyo 2003:22-24). For instance, the Netherlands Court of Audit in 1999 obtained an expression of Firth et.al. (2009: 118-132) revealed that timeliness in disseminating sanction and enforcement information leads to higher transparency and provides up to date information for regulatory agencies in other parts of the world. This is also applied in the case of the timeliness of audit findings and results. If auditors do not publicly announce the report to stakeholders on time, the audit reports may not be used effectively (Soedibyo 2003:22-24). For instance, the Netherlands Court of Audit in 1999 obtained an expression of
The recent development of communication and IT may make it possible to deliver audit findings and reports more quickly and on time. Russell and Regel (2000: 171) argued the development of communication technology helps auditors to distribute audit reports in
a timelier manner.