How Do You Write an Audit Memo?

Writing an audit memorandum consists of outlining the company's finances; listing the physical items in the company's possession; and comparing book inventory with physical inventory and noting discrepancies, according to Danny Donahue for the Houston Chronicle. The audit memorandum also details the company's contracts and labor productivity.

The audit memorandum is the final step in the audit process, explains Donahue. Its purpose is to succinctly describe each phase of the audit. These descriptions include recommendations for improvement of recordkeeping practices and profitability. The audit process reconciles the financial and physical assets of the business with the business' records. Often, an audit uncovers inaccuracies that management is unaware exist. The audit memorandum summarizes these inaccuracies and gives management a clear picture of where the business stands.

For example, the audit memorandum shows if the business has a higher or lower financial standing than its records indicate. It also details physical items that are recorded as assets but are missing. In addition, the audit memorandum provides analysis of the productivity of the labor force per work hour, notes Donahue. It also provides analysis of the company's contracts and how they are likely to impact the company in the future. The audit memorandum ends with a summary of the audit and recommendations for improvement.