Reporting for impact - Improving readability of audit reportsBy Mr. K. Subramaniam, PAG

The need for enhancing the value and impact of CAG’s audit has been an enduring concern. If our audit reports are to make a difference to our stakeholders- the law makers, executive and the public, they need to be made more usable and relevant. To make the reports more usable, they should be made easily readable and comprehensible. CAG reports which often deal with complex financial and operational issues, should disseminate such information in a simplified manner. Improving the readability of our audit reports has been a matter of deliberation for the last two decades.

This article analyses the challenges of readability of our reports and recommends ways of making them more reader friendly and resultantly more impactful.

Writer vs Reader Mindset

i. Report cluttered with data, often irrelevant to the main audit point.

Audit teams collect a lot of data during the audit process and are eager to pour all this information in the report to reflect their effort, even if the information does not add any value to the audit assertion. This is more evident in the numerous tables used in the report to present the analysis. Excessive detail should be avoided so that readers are not buried under irrelevant facts and distracted from the larger audit point. The following extract from a report illustrates this point.

An amount of ₹ 4.25 lakh deducted from bill Id 1413851369 (token number 1901203608) drawn by National Highways Divisional Office (NHDO), Xpuram was credited to deposit account No. 10556A074 belonging to District Co-Operative Societies Office, Ynagar instead of crediting to designated GST deduction account of NHDO, Xpuram.

Such details may be useful in the Inspection Report or Factual Statement to present persuasive evidence to convince the auditee. When converting these into draft paras such details are unwarranted.

ii. Optimising accuracy and clarity

In their effort to depict the facts accurately, auditors end up reporting every detail of the case, leading to hair splitting and compromising clarity. For instance, while analysing the performance of state PSUs, the PSUs have been split into two categories - ‘Government Companies’ and ‘Government Controlled Other Companies’. The latter denotes government companies which are JVs of two government companies and for all practical purposes, they are essentially the same as a government company. There is no such category called ‘Government Controlled Other Companies’ and this category has been created by audit in its misplaced quest for accuracy. Ministry of Corporate Affairs has also clarified (Sep 2014) that all other companies owned or controlled, directly or indirectly by the Government will be treated like Government Company. Creating this category ‘Government Controlled Other Companies’ does not serve any purpose except to clutter the whole presentation.

Optimum balance between accuracy and clarity needs to be maintained to enable the reader to easily identify the evidence and comprehend the issues addressed.

iii. Logical structure of presentation

Readability is also impeded by the sequence of presentation of the condition (observed facts and evidence), criteria and conclusion. Our reports follow a linear presentation wherein the criterion is presented first, followed by the observed condition and the main audit assertion or opinion at the end. The reader’s patience is tested as he/she has to go through a whole lot of information before knowing what it is leading to. This is further compounded by the fact that at the outset the reader is explained the criterion by making him/her read half a page or more of rules, quoted verbatim in legal language from the rule book. The structure of logic (syllogism) as well as international reporting standards require the observed facts to be presented first (IIA Standard 2420 and US Government Accounting standards).

Impactful reports state the main audit point upfront and then explain why they are saying so by stating the supporting facts with arguments/ analysis. This enables better appreciation as the reader immediately understands the main audit point and goes through the remaining information knowing where it is leading.

Prioritising of issues or sequencing of chapters

Performance Audit of a programme or activity tries to assess the effectiveness and efficiency of the programme. According to Performance Audit standards the first audit objective and the first question which the reader is interested in, is whether the targets and objectives of the activity were achieved. The next question is whether in achieving these objectives, the resources were used efficiently. The next step is to work backwards and examine the reasons for shortfall in achievement of objectives and inefficiency by examining systems, processes, and controls. Therefore, observations or chapters of the report need to be sequenced accordingly by discussing effectiveness upfront. On the contrary, our performance audit reports follow a linear sequence where the first chapter is on the planning process, followed by the chapter on financial management and other issues, with the real issue of effectiveness relegated to later chapters. For example, in the performance audit report on Solid Waste Management the primary question of effectiveness - ‘whether the local bodies collected all the garbage in time’ was addressed in the fourth or fifth chapter. This distorted sequence is a major barrier to impactful communication of audit findings.

Long winding sentences

Long winding sentences, often about five lines containing several facts and assertions in one sentence is against the norms of effective communication. Sentences should be short and direct with each sentence not more than two lines. One sentence should depict only one fact or assertion. The following example illustrates this point:

Government of India sanctioned construction of three EMRS and One Ekalaya Model Day Boarding School, Peepal Khunt (Pratapgarh) during 2018-19 and 2019-20 at a cost of Rs. 20.00 crore and Rs. 14.00 crore respectively.

The reader friendly version:

Government of India sanctioned construction of three EMRS during 2018-19 at a cost of Rs. 20.00 crore. Another EMRS (Day School) was sanctioned in 2019-20 at Rs. 14.00 crore.

The following assertions from George Orwell’s “Politics and the English Language” should be kept in mind while drafting:

“Never use a long word where a short one will do.”

“If it is possible to cut a word out, always cut it out.”

“Never use the passive when you can use the active.”

An example of use of avoidable extra words:

The company paid an amount of Rs 20 cr during the period 2020 to 2023.

Another practice seen lately, is the starting of every audit observation with the words ‘scrutiny of records at the office of the XX (Oct 2023) revealed that ….’. Starting every audit observation by explaining what records were seen, at what office and when, is redundant when this information is already given in the introduction under scope, methodology and coverage.

Use of Technical terms

Use of Technical terms within a specific field or overly complex terms makes the report very incomprehensible for readers. When reporting on complex or technical matters the technical terms and acronyms should be converted to simple understandable language. For instance, in the defence sector nomenclature of stores is based on inventory cataloguing, which results in terms like socks woollen, shirt khaki, boots leather, hat Gorkha etc. However, in the audit reports these terms are used as it is without converting them to common usage like woollen socks, leather boots etc. In 2006, there was an audit para highlighting the irregularities in the conduct of medical examination during recruitment of army jawans. Six months after joining their training centres, the recruits, during a medical check-up were found medically unfit. They were detected with medical conditions like flat foot, bone deformity etc., which were pre-existing and should have been detected during the initial medical test. Significant number of recruits were dismissed (invalidated). This was a serious irregularity raising a question mark over the whole recruitment system with indications of fraud and corruption. However, this did not get the desired attention and was not selected by PAC, because of the incomprehensible title of the para – “Invalidation of recruits” which did not correctly convey the irregularity. Invalidation was the technical term used by the army.

Way Forward

If our reports are to make an impact, the above issues need to be addressed and the audit staff sensitised about the nuances of drafting. Stakeholder analysis is an important part of any assessment and such Stakeholder mapping during the initial audit planning will enable better targeting of the audit reports, leading to better impact.