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1. What is operational auditing and how can it add value to the organization?
Operational audit is the type of audit service that the review is mainly

focused on the key processes, procedures, system, as well as internal control
which the main objective is to improve productivity, as well as efficiency and
effectiveness of the operation.
The operational audit has also targeted the leak of key control and
processes that cause waste of resources and then recommend for
improvement. Operational audit is the part of the internal audit and their main
aim is to add value to the business their professional services. Systematic and
highly discipline is also the part that helps to make sure the operational audit
adds value to the organization.
2. Explain the importance of independence and objectivity and how having

unfettered access within the organization impacts the internal auditors’ ability
to review any program, process, system, record, at any time and perform
operational reviews.
One of the first qualities that the auditor must have is first, independence. The
Internal audit must be reported to the Audit Committee of the Board of Directors and
should not be under the control of the reviewing individual. The objectivity refers to
the auditor's thinking and ability to find documents, processes, and programs without
prejudice, and without any motive other than finding the truth and communicating it
accurately and in a timely manner. With these qualities, the auditor maximizes his
potential and draws the attention of those whose influence, gratitude, and respect
may enforce corrective actions for abnormalities identified by the auditors.
3. Explain the five stages in the IA-CM and its implications for operational
auditing.
The five levels of the IA-CM are the following below:
1. Initial.
2. Infrastructure.
3. Integrated.
4. Managed.
5. Optimizing.
The IA-CM framework consists of five levels of capability tied to leading practices. These five
levels are: Initial, Infrastructure, Integrated, Managed and Optimizing. Each capability level
describes the characteristics and capabilities of an internal audit activity at that level and
tries to match the complexity of the organization with the capabilities needed to support it.
Internal audit departments can start by providing leading edge data analysis software
and the requisite training to staff to enable them to use this software effectively. By
doing so, organizations can improve their status on the Internal Audit Capability
Model Matrix from Level 1 – Initial to higher, more productive levels in the matrix
Level 2 – Infrastructure is about ensuring that internal audit departments are

equipped with the right set of tools (including audit analysis technology) to perform
their work. The union of skilled people with the right tools results in improved benefits
to the audit process.
Level 3 – Integrated is about building a cohesive audit team that works

collaboratively together in a co-ordinated way. ACL’s newly released
AuditExchange2 product does just that. By providing internal auditors with a
managed platform, auditors can improve the way in which they manage audit data,
results, and documents. The ability to properly share this information in a controlled
and secure manner also improves the use of data analysis with a wider audience of
auditors. Not to mention the ability to provide stakeholders with more tangible and
supported audit results.
Level 4 – Managed describes how an improved internal audit function can

contribute to Management Developments. I see this as the culmination of
Continuous Auditing and Monitoring in providing important and relevant findings to
the operational managers who can then use these findings to improve their
processes and controls.
Finally, Level 5 – Optimized is the desired end outcome whereby the use of leading
edge technology is fully integrated with the audit departments goals and objectives.
At this stage, the organization is benefiting from a well run and highly effective
department.
4. Explain integrated auditing.
An integrated audit involves both the audit by an outside auditor of a client's

financial statements and its system of controls over financial reporting. An
integrated audit will likely include an extensive examination of the controls
associated with a firm’s transaction processing systems. The unusual element of
this type of audit involves the client's internal controls. The controls audit is a
requirement imposed by section 404 of the Sarbanes-Oxley Act. Integrated
audits are required for larger publicly held companies. There is no requirement
for smaller public companies or private companies to pay for an integrated audit;
instead, they usually prefer to only pay for an audit of their financial statements.
5. Describe the difference between controls-based and risk-based auditing.
This controls-based audit approach is well-defined in the audit and

assurance discipline. Audit and assurance roles are focused on the
inspection, verification or conformance to a set of practices or controls to
ensure guidance is being followed, records are accurate and effectiveness
targets are being met. It is assumed that audit and assurance
professionals are tasked with ensuring and evaluating that things are
operating according to a prescribed or bounded set of criteria. While the
risk-based audit is best paired with a strategic view of the organization to
understand which potential uncertainties or risk factors have the highest
potential to prevent the organization from meeting its intended targets,
objectives, mission, etc. A thoughtful risk assessment will consider the
general things that can affect all organizations (about 80% of an
enterprise risk) and will also consider those things that are specific to your
individual type of business or organization (about 20% of an enterprise
risk). The reason there are so many compliance regulations, control
catalogs or best practices is that many organizations do not perform risk
assessments with the rigor, depth or thoughtful analysis (qualitative and
quantitative) that is needed to really understand where to focus the
appropriate resources to manage the uncertainties that may materialize in
a given day.
6. Explain the importance of using business objectives while planning and

performing operational audits, and how to use them when communicating the
results of the audit.
The importance of using business goals in planning and conducting tax audits is that
the auditor needs to keep in mind the purpose or purpose of the organization. In
connection with their use in communicating audit results, they serve as an important
foundation for creating company-wide value and measuring the efficiency and
effectiveness of audited operations, programs, or processes.
7. Explain how an organization could meet its compliance requirements but

still fail over the medium and long term.
Compliance is not the only factor that determines a company's success, but it cannot
be denied that it is important for an organization's reputation and internal control.
There are other opinions that auditors should be aware of, such as new changes to
business rules. It is also worth considering the plans needed to achieve your
business goals.
REFERENCES:
https://www.wikiaccounting.com/operational-audit/
http://www.auditcorner.com/2015/05/internal-audit-capability-model-iacm.html
http://www.dataconsulting.co.uk/acl-blog-the-5-levels-of-the-internal-audit-
capability-model-for-the-public-sector-ia-cm/
https://axio.com/insights/isaca-tips-for-moving-from-a-controls-based-
approach-to-a-risk-based-approach/

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1. What is operational auditing and how can it add value to the organization?

Operational audit is the type of audit service that the review is mainly

2. Explain the importance of independence and objectivity and how having

Level 2 – Infrastructure is about ensuring that internal audit departments are

Level 3 – Integrated is about building a cohesive audit team that works

Level 4 – Managed describes how an improved internal audit function can

4. Explain integrated auditing.

An integrated audit involves both the audit by an outside auditor of a client's

5. Describe the difference between controls-based and risk-based auditing.

This controls-based audit approach is well-defined in the audit and

6. Explain the importance of using business objectives while planning and

7. Explain how an organization could meet its compliance requirements but

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