CHAPTER 15 Report Writing and Management Letter Writing the Report The accountant preparing the report should use grammatically correct language. It is necessary then for the auditor to review the mechanics of the business language and adopt the necessary rules for better writing. Among the professions, public accounting requires more communication writing. This is not the domain of the partners alone, From the lowest to the highest rank - juniors to the partners, all need to communicate constantly in respect to his assigned task. Yet it is sad to note that there are complaints about the communications of auditors. Some of the causes of writing difficulties are as follows: © hurried writing ‘failure to review and improve one's materials lack of understanding of the importance of good writing failure to realize the deficiency lack of planning inadequate vocabulary - technical and nontechnical lack of independent review and critici inadequate language training poor reading habits language-harmful environments at home, office and other points of contactThe Audit Favetion ” Elements of Good Accounting Communication Correctness and completeness of data All data for inclusion in the report should be collected. They should stand the test of soundness and relevance. They should cover the subject adequately both from the viewpoint of the reader as well as the auditor. Organization of Data Data should be presented logically. If needed, titles should be given so that the presentation would reveal the nature or purpose of the communication. A subject should be introduced, facts presented and a conclusion drawn, There are times. when conclusion is first presented followed by the faets that support it. Quality of Language This is a little difficult since these refer to the accumulated training and background of _ the individual. _It_ includes the vocabulary, grammar, syntax and style of writing of the auditor himself. Although the circumstances differ, one could overcome this difficulty by self-development. For more serious cases, schooling — may For those who only need improvement, friendly constructive criticism may be the only thing necessary. Some Tips On Better Writing Economy of Words Too many words waste everybody's time, waste paper and discourage the reader to a point he may lose interestThe Audit Favetion 98 You may not achieve economy on first writing. On second reading of the draft, eliminate words. Example, " I came to the conclusion" could be presented as "I conclude", "on a number of occasion” could be presented as "often". Generalization and Other Flaws Use the verb "to be" as little as possible. Rarely use passive voice. Do not say "all" when you mean "some", "many" for "one." Avoid absolutes. Rarely is a situation black or white, it usually fits somewhere in between, Flourish Every person has his own peculiarity in writing. Some are humorous, some are flowery. An occasional humor or flourish could add spice to the communication. Excessive ones however could distract the message of the communicatior "I" Syndrome It is better to project the facts rather than the writer in an accounting communication. It could be distracting to the reader. Use "I" as discretely as possible. Know Your Reader must be comprehensible to the reader. Clerks may have a different level of perception as compared to a controller. Management Letter As indicated in the engagement letter, the firm should give the client a letter regarding the review in cases where item of importance to the client comes to our attention.The Audit unetion 99 ‘The working paper should indicate areas and situations that will be for inclusion in the letter of comments, usually indicated by the tickmark "LTR" or any such symbol. These items should be accumulated in an outline form as the audit progresses and used as the basis forthe preparation of the letter of comments. At the end of the audit or if necessary after the interim examination, prepare a letter or a report containing suggestions for improving the clients’ accounting procedures, system of internal control and related areas. By doing this, the — firm renders the client valuable professional services. That also enhances professional relationship with the client The draft of the letter should be done when the audit field work is finished. The timing will provide the auditor with the necessary frame of mind as the data will still be fresh from his memory Among the more salient points for inclusion in the letter would be adequacy of insurance coverage, results of, confirmation, requests, results of test counts. If there are "passed adjustments" (i.e. adjustments which were small that they were not included in the proposed adjustments but given to the client for recording in the books in the subsequent year) they should be part of the items for inclusion into the letter of comments. Before finalizing the report, it should be thoroughly discussed with appropriate personnel in the client's office to avoid any misunderstanding as to facts. It is not to be deemed as letting the person concerned in the report approve the letter. Rather it would give them the opportunity to clear things up and possibly, the auditor may include the same in the letter itself. Insignificant criticism of the internal control should be omitted. If in a prior letter certain items were already taken up, comment again on items not fully implemented. There should be an item on those suggestions that were already implemented,The Audit Favetion 100 The presentation of the items in the letter of comments should follow that of the financial statement presentation. Group the data accordingly so that there would be coherence in the report. We should bear in mind that the letter is a by-product of the financial examination. As such, we should so state in the letter. There should be a statement that it is not a thorough system survey bbut rather a result of test checks in accordance with the audit requirements of recurring financial au If our recommendation is based on facts (e.g. vouchers are not approved), we do not need to qualify. If there are any questions that the data presented are not representative of what is prevailing, state so that it is the result of test checks and not a comprehensive review of the system. Sometimes it could be an occasion to recommend additional services to the company like a thorough systems survey and — hence it will be an additional job and fee.