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The practice of including ratings in internal audit reports to highlight or summarize results is not something new. I began exploring and lecturing on the pros and cons of ratings more than 10 years ago. But the subject came up recently at a CAE roundtable, reminding me how popular — yet controversial — the practice continues to be.

Almost 40 percent of those in the room use ratings in some form, and the last time I formally surveyed on the practice, more than two-thirds of respondents said they were including ratings in their audit reports.

Ratings are often assigned based on the overall results of the audit, and they can take on adjectival forms, such as « satisfactory, » « needs improvement, » or « unsatisfactory. » More creative approaches include assignment of ratings to individual findings, or using color-coded indicators, such as green, yellow, red. Regardless of the methodology, the objective for assigning ratings is typically the same: It is a powerful way to draw management and the board’s attention to the bottom line of an internal audit. https://iaonline.theiia.org/blogs/chambers/2017/Pages/Ratings-in-Audit-Reports-Lights-or-Lightning-Rods.aspx