How to Respond to Audit Findings


July 1, 2024
Image

How to Respond to Audit Findings

 

Once auditors have completed an audit of your childcare organization, they will issue an audit report noting any findings that must be addressed. In the following guide, we explore three options when it comes to responding to an audit report and share how to write a formal response to an audit report. Read on to find out more. 

When you read an audit report, your first response may be one of defensiveness and concern. After all, audit findings are public information, and you want to protect the reputation of your childcare organization. While we understand this viewpoint, we encourage childcare providers to view the audit report as a source of information that can help them overcome weaknesses that pose risk to their organization and maintain or improve their standing with both regulatory entities and the public. In this light, an appropriate response to an audit report will serve you best, and we will explore three options for responding to the audit report next. 

Agreement Response 

If you agree with the findings in the audit report, then you will write a response affirming your agreement with the report. Your response will include an acknowledgement of the findings identified in the report and offer a plan of corrective action for addressing each finding with an appropriate solution. You will also include the name and title of the person responsible for implementing the corrective action, as well as the planned date of completion. 

Disagreement Response 

If you disagree with the findings in the audit report, then you will write a response stating your disagreement with the report. Your response will include an acknowledgement of the findings listed in the audit report, an explanation of why you disagree with the findings stated, and documentation supporting your position. You will also include a responsibility statement for non-corrective action, along with the name and title of the person responsible for accepting any risks associated with the suspension of corrective action.  

No Response

Technically, you also have the option to provide no response to the audit report, but we don’t recommend it. When an auditor issues findings under Yellow Book audit standards (optional link to article, “What Is a Yellow Book Audit?”) but does not receive a response from an organization’s management, they are required to report an acknowledgement of no response. Government agencies or regulatory entities may then investigate why the organization has elected not to comment and what it is doing to address the findings. Deferring your response from the auditor to the regulatory body can be problematic for a childcare organization out of compliance. 

How to Write a Response to an Audit Report  

If you agree with the findings issued in an audit report, you will want to include the following information in your written response: 

  • Name of the findings as noted in the report 
  • Statement of agreement with the findings
  • Plan of corrective action addressing each point of the recommendation
  • Name and title of person responsible for implementing plan of corrective action 
  • Date of planned completion of corrective action 

If you disagree with the findings issued in an audit report, be sure to include the following in your written response:

  • Name of the findings as noted in the report
  • Statement of disagreement with the findings
  • Explanation of position, including detailed reasons why management believes no corrective action is needed
  • Responsibility statement for non-corrective action, including state name and title of person responsible for assuming risks associated with opting out of corrective action 
  • Supporting documentation 

It’s important to remember that before you write your formal response to an audit report, you will have ample opportunity to address any questions or concerns about findings that arise from the audit with your auditors. 

Honest Buck Accounting specializes in providing Yellow Book audits for preschools who receive $750,000 or more in state or federal funding programs. We walk you through the entire audit process and provide guidance to help you navigate a successful audit. Reach out to our team of experts to get started with your audit. 


Share this article