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    Lesson 3

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    Alexandra Denise Peralta
    The document outlines the key objectives and phases of an operational audit: 1. The objectives are to determine whose needs the audit is addressing, such as new rules, poor performance, or compliance issues. 2. The phases include planning, fieldwork, and reporting. Planning involves scoping and risk assessment. Fieldwork is when testing is performed through interviews, documentation, and evidence collection. Reporting communicates findings and recommendations. 3. Follow-up verifies that corrective actions addressed issues and problems identified in the audit reports. Metrics are used to assess performance against objectives. People, processes, and technology drive organizational goals and mission.

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    Lesson 3

    Uploaded by

    Alexandra Denise Peralta
    3 views34 pages
    The document outlines the key objectives and phases of an operational audit: 1. The objectives are to determine whose needs the audit is addressing, such as new rules, poor performance, or compliance issues. 2. The phases include planning, fieldwork, and reporting. Planning involves scoping and risk assessment. Fieldwork is when testing is performed through interviews, documentation, and evidence collection. Reporting communicates findings and recommendations. 3. Follow-up verifies that corrective actions addressed issues and problems identified in the audit reports. Metrics are used to assess performance against objectives. People, processes, and technology drive organizational goals and mission.

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    The document outlines the key objectives and phases of an operational audit: 1. The objectives are to determine whose needs the audit is addressing, such as new rules, poor performance, or compliance issues. 2. The phases include planning, fieldwork, and reporting. Planning involves scoping and risk assessment. Fieldwork is when testing is performed through interviews, documentation, and evidence collection. Reporting communicates findings and recommendations. 3. Follow-up verifies that corrective actions addressed issues and problems identified in the audit reports. Metrics are used to assess performance against objectives. People, processes, and technology drive organizational goals and mission.

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    © All Rights Reserved
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    3 views34 pages

    Lesson 3

    Uploaded by

    Alexandra Denise Peralta
    The document outlines the key objectives and phases of an operational audit: 1. The objectives are to determine whose needs the audit is addressing, such as new rules, poor performance, or compliance issues. 2. The phases include planning, fieldwork, and reporting. Planning involves scoping and risk assessment. Fieldwork is when testing is performed through interviews, documentation, and evidence collection. Reporting communicates findings and recommendations. 3. Follow-up verifies that corrective actions addressed issues and problems identified in the audit reports. Metrics are used to assess performance against objectives. People, processes, and technology drive organizational goals and mission.

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    of 34

    Objectives and

    Phases of
    Operational
    Audits

    Robert Rubin, CPA


    BULSU Professor
    Agenda
    • Key Objectives of Operational Audits
    • Phases of the Operational Audit
    • Risk Factors
    • Fieldwork
    • Types of Audit Evidence
    • Workpapers
    • Flowcharts
    • Internal Control Questionnaire
    • Reporting
    • Follow-Up
    • People, Processes, and Technology
    Key Objectives
    of Operational
    Audits
    Determine whose objectives the engagement is
    intending to address.

    The internal auditors


    should get management
    Internal audit should be
    involvement as much as
    careful not to define the
    possible to make sure that
    objectives unilaterally.
    the review will meet their
    needs.
    The objectives for the review could be driven
    by the following :
    New rules.

    Poor performance.

    Compliance issues.

    Anomalous revenues or expenses.


    Phases of the Operational Audit

    PLANNING FIELDWORK REPORTING


    • Includes scoping, budgeting, defining the
    population of interest, how testing will be
    performed, and announcing the audit.
    1. Planning
    • “Failing to plan is planning to fail”
    • The starting point should be the performance of a risk assessment
    that allows the CAE(Chief Audit Executive) to prepare an audit plan
    based on the results of an analysis of the organization’s audit
    universe.
    • should be done collaboratively with senior management and the
    board of directors to get their input about plans, concerns, and
    priorities.
    • These include communicating with the
    corresponding process owner about the
    timing of the review,
    • requesting needed financial and
    operational reports and documents,
    Audit Plan • coordinating staff availability,
    • identifying the systems in use, and
    • defining the scope, objectives, work
    schedule, and budget for the
    engagement.
    ◾ What could go wrong?
    Questions ◾ How could that unit fail?
    ◾ Are there any liquid assets that require special care and oversight?
    need to ◾ What physical assets are bought and used? How do they need to
    be protected and used for maximum effectiveness?
    consider ◾ What intellectual or digital assets are used and constitute a key
    success factor? These might include personally identifiable

    when information, copyrights, and licenses.


    ◾ How could someone or something disrupt the operations?

    Planning the ◾ What are the objectives and how do we know if the unit is
    achieving them?

    audit : ◾ Where are the people, processes, systems, or assets vulnerable?


    ◾ On what information do they rely the most?
    ◾ On what do they spend the most money?
    Questions ◾ How do they bill and collect revenue?
    need to ◾ What activities are most complex?
    ◾ What activities are regulated?
    consider ◾ What is their greatest legal exposure?
    when ◾ What decisions require the most judgment?
    ◾ How could someone steal from the unit?
    Planning the ◾ What systems are in use?
    audit : ◾ Who has access to these systems and what
    activities can they perform using it?
    • play an important role during
    planning, and in particular, during
    risk assessments.

    Risk Factors • are conditions and other variables


    that in their present, or absence, as
    the case may be, either exacerbate
    or diminish the underlying risk
    • This phase is when most of the testing is
    2. FIELD performed, and it includes interviewing,
    documenting, applying testing
    WORK methodologies, managing fieldwork, and
    providing status updates.
    • Testimonial
    • Observation
    Types of • Document Inspection
    • Recalculation/Reperformance
    Audit
    • Professional Skepticism
    Evidence • Workpapers
    • Flowcharts
    • Testimonial evidence consists of
    verbal or written statements or
    assertions given by someone as
    proof regarding the matter being
    Testimonial discussed.
    Evidence
    • Auditors typically observe
    conditions and dynamics related to
    the subject of the review.

    Observations • In general, auditors visually


    evaluate physical facilities,
    conditions, and practices to verify
    they exist, their condition,
    valuation, and protection.
    • one of the most common
    procedures performed by auditors
    who examine documents to verify
    the date and amount of
    Document transactions, agreements made
    Inspection between various parties, evidence
    of authorizations and record of
    decisions made, among others
    • Mathematical recalculation is a
    form of audit evidence and it
    consists of checking the accuracy
    of documents or records.
    Recalculation
    • Auditors are tasked with verifying
    the integrity of the information
    gathered and make sure their
    conclusions are sound
    Professional
    Skepticism
    • are documents created by auditors
    to record the work done.
    • They are a collection of evidentiary
    material showing the planning
    Workpapers done, the fieldwork activities
    performed, and the support for all
    information mentioned in the audit
    report or other communication of
    results.
    • Another common type of workpaper
    is the process flowchart.
    • A flowchart is a diagram of the
    sequence of movements or actions of
    people or things involved in a process
    Flowcharts or activity.
    • They illustrate a business process and
    virtually any process can be drawn in
    the form of a flowchart.
    • The third phase of the audit is the
    communication of results, often referred to
    as reporting.
    3. Reporting • It consists of communicating findings,
    observations, and best practices noted
    during the review, and developing
    recommendations for corrective action.
    Attributes of effective Audit Findings
    • After findings are reported, it is
    incumbent on both management and
    auditors to verify that the corrective
    actions are in fact applied and the
    problems fixed as expected.
    Follow-Up • It does not serve the interest of the
    organization and its stakeholders for
    internal audit findings to be ignored
    after they are published in audit
    reports
    • exist to assess the performance
    and provide a comparison between
    what should have been done and
    what was actually done
    Metrics
    • Organizations should establish
    goals that drive their direction,
    People, prioritize the allocation of
    resources, give employees a sense
    Processes, of mission, and help the
    and organization’s vision become a
    reality.
    Technology
    Questions
    & feedback

    32
    Assessment
    Test

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