What are the 5 C's of audit?

The 5 C's of audit are a framework used by auditors to structure audit findings and communicate issues clearly, they are Criteria, Condition, Cause, Consequence or Effect, and Corrective Action or Recommendation. Criteria is what should be, the standard, policy, or expectation that should be followed, for example company policy requires receipts for all expenses over $25. Condition is what actually is, the current state found during audit, for example 40 percent of expenses over $25 lacked receipts. Cause is why the condition occurred, the root reason, for example employees were not trained on receipt policy and manager did not enforce it. Consequence or Effect or sometimes called Consequences is the impact or risk of the condition, for example increased risk of fraud, inaccurate financial reporting, and potential IRS penalties. Corrective Action or Recommendation is what should be done to fix it, for example provide training, implement manager approval, and require monthly review. Using the 5 C's helps auditors produce complete, logical, and actionable findings that explain not just what is wrong but why it matters and how to fix it, improving clarity for management and ensuring audits lead to real improvements.