Submitted by: Submitted by honey19
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Category: Business and Industry
Date Submitted: 01/31/2011 07:02 AM
Group 1
OPERATIONAL AUDITING
Operational auditing refers to the auditor’s study of business operations for the purpose of making recommendations about economic & efficient use of resource, effective achievement of business objectives and compliance with company policies. It is also known as Management audits or Performance audits.
• Operational - implies a focus on operations, as opposed to financial position
• Management - implies that the information obtained in the audit process is useful to management in decision making
• Performance - implies an evaluation of the performance of persons or units in executing the entity’s objectives
TYPES OF OPERATIONAL AUDIT
• Functional - a mean of categorizing the activities of a business
• Organizational - deals with an entire organizational unit
- how efficiently and effectively functions interact
• Special Assignment - arise at the request of management
OBJECTIVES OF OPERATIONAL AUDIT
• Assessments of the unit’s performance in relation to management’s objectives or other appropriate criteria.
• Assurance that its plans (as set forth in statement of objectives, programs, budgets, and directives) are comprehensive, consistent, and understood at the operating levels.
• Objective information on how well its plans and policies are being carried out in all areas of operations and on opportunities for improvement in effectiveness, efficiency, and economy.
• Information on weaknesses in operating controls, particularly as to possible sources of waste.
• Reassurance that all operating reports can be relied on as a basis for action.
Scope of Operational Audit
• Economy and efficiency audits
• Program audits
• Compliance audit
DISTINCTION BETWEEN OPERATIONAL AUDIT AND FINANCIAL AUDIT
Operational Auditing
• Effectiveness, efficiency and economy
• Future-oriented
• Reports...