Planning," means developing a general strategy and a detailed approach for the expected nature, timing and extent of the audit. The auditor should plan the audit work so that the audit will be performed in an effective and timely manner. There are several purposes of the planning procedures…
An operational audit is a review of any part of an organization's operating procedures and methods for the purpose of evaluating efficiency and effectiveness. At the completion of an operational audit, management normally expects recommendations for improving operations. An example of an operational audit is evaluating the efficiency and accuracy of processing payroll transactions in a newly installed computer system. Another example, where most accountants would feel less qualified, is evaluating the efficiency, accuracy, and customer satisfaction in processing the distribution of letters and packages by a company such as federal express.
Because of the many different areas in which operational effectiveness can be evaluated, it is impossible to characterize the conduct of a typical operational audit. In one organization, the auditor might evaluate the relevancy and sufficiency of the information flow in processing sales. In operational auditing, the reviews are not limited to accounting. They can include the evaluation of organization structure, computer operations, production methods, marketing, and any other area in which the auditor qualified.1
The conduct of an operational audit and the reported results are less easily defined than for either of the other two types of audit.effeciency and effectivene...
In addition, establishing criteria for evaluating the information in an operational audit is an extremely subjective matter. In this sense, operational auditing is more like management consulting than what is generally regarded as auditing.
Operational Auditing is a non-financial audit that involves a systematic process of evaluating an organization's (or part of an organization's) effectiveness, efficiency, and economy of operations under management's control, and reporting to appropriate persons the results of the evaluation along with recommendations for improvement.
Operational auditing focuses on management goals, initiatives and strategic plans to generate innovative solutions for the challenges that face the units and their managers. The process verifies the existence and effectiveness of management controls that are meant to ensure that the unit meets its operating objectives. The scope of the audit is expanded beyond the verification of financial controls or compliance with policies. Operational auditing looks for the existence of management controls (such as leadership, employee empowerment, teamwork, risk assessment, information, communication, resource allocation, productivity measurement, etc.) that support the financial controls in attaining goals set by the units. Desired results of operational audits include discovering innovative solutions, promoting creativity and new ideas, and recommending operational improvements.
Before an operational audit for effectiveness can be performed, there must be specific criteria for what is meant by effectiveness. Effectiveness is the degree to which the organization's objectives are accomplished. An example of an ...
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Various driving factors and inherent benefits for different companies are proving to be incentives for the organisations towards enhanced financial globalisation. The growing interdependence of developed economies on developing and emerging economies is contributing towards increased globalisation (Hamilton & Quinlan, 2008, p.iv).
It also includes profitability and protection of the company's assets. This exhibits that the internal control system should first of all meet the objective of accomplishing the company's operational goals and objectives. The second objective of an internal control system is to prepare a reliable and trustworthy financial reporting system.
luenced by the nature of entity’s business, its business risk, and external influences.”(Lain Gray and Stuart Manson, page 674)i This concept is related with continuation of activities in the normal and regular course of business activities. That does not means that
In 2009 the Net Cash Flow from operating activities has been reported at $16.722 million (Forest Enterprises Australia Limited, 2009, p.55).
For 2009 the company reported a net loss figure of $14.13 million. Based on this the net profit margin and the
This letter is to confirm the arrangements and understanding of the upcoming audit of your company. I will to take this opportunity to explain few points about audit and assurance services offered by the firm. The
d control can be manifested in assessing whether the company’s operations are in-line with that of the policies stated and they are being conducted in an efficient and effective way. Management auditing is significant to entrenching the worldwide established standards and
However, in more technical terms, the company is housing a trading business and it has one sales representative who is responsible for maintaining close relations with suppliers and customers respectively.
Auditors then study the internal control system of the organization when they finish identifying risks: this system is made of procedures that help to prevent errors, protect assets, and guarantee compliance with
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