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SERVICES
OPERATIONAL AUDITING
OPERATIONAL AUDITS
Management/Performance Audit
Conducted to evaluate the degree
of effectiveness, efficiency and
economy of operations
Making recommendations on
economic and efficient use of
resources, effective achievement
of business objectives and
compliance with company policies.
EFFECTIVENESS
Entity or its units success in
achieving its goals and objectives
Before an operational audit for
effectiveness can be performed,
there must be specific area for what
is meant to by effectiveness.
EFFICIENCY
Refers to how well an entity uses its
resources to achieve its goals.
Described as reducing cost without
reducing effectiveness
ECONOMY- refers to entitys success in
maximizing the use of its limited
resources to achieve its goals and
objectives.
Independence
Auditor should not be responsible for performing
operating functions in a company or for correcting
deficiencies when ineffective or inefficient operations
are found.
It is acceptable for auditors to recommend changes in
operation, but operating personnel must have the
authority to accept or reject the recommendations.
If auditors had the authority to require
implementations of their recommendations, the
auditor would actually have the responsibility for
auditing his or her own work the next time an audit will
be conducted. Independence would therefor be
reduced.
Competence
Necessary to determine the cause of
operational problem and make
appropriate recommendations.
Familiariza
tion
Preliminary
Survey
Program
Developme
nt
Reporting
the
Findings
1. Planning Phase
1.a. Definition of Audit Purpose- the
purpose is to appraise the
performance of a particular
organization, function, or group of
activities. The scope of audit and
nature of report must also be
specifically stated. The auditors
must determine specifically which
policies and procedures to be
appraised nd how they relate to the
specific objectives of the
organization.
1. Planning Phase
1.b. Familiarization- acquisition of comprehensive
knowledge of the objectives, organizational
structures and operating characteristics of the
unit being audited. This begins with study of org
charts, statement of functions and
responsibilities assigned, mgt policies and
directives and operating policies and procedures.
This background information equips the auditor
to visit the organizations facilities and interview
supervisory personnel to determine their specific
objectives, the standards used to measure
accomplishments of these objectives, and the
principal problems encountered in avhieving
these objectives.
1. Planning Phase
1.c. Preliminary the auditors preliminary
conclusions about the critical aspects of the
operations and potential problem areas are
summarized as the auditors preliminary survey
which serves as guide for the development of the
audit program.
1.d. Development of the Audit Program- it is tailormade for a particular engagements. It contains all
the test and analyses the auditors believe are
necessary to evaluate the organizations
operations. based on nature and difficulty of the
audit work, appropriate personnel will be assigned
to the engagement, and the work will be
scheduled