Operations Audit - a systematic and ● Independence - has to do with the

objective evaluation of an organization’s position of internal audit within the

operation to achieve its objective. organization’s hierarchy.

Purposes of Operation Audit ● Objectivity - related to the auditor’s

- Identify Inefficiency frame of mind and their ability to
- Improve Efficiency examine documents, processes and
- Increase Effectiveness programs without bias, without an
- Ensure Compliance agenda, with no other motive than to
- Improve Risk Management find the truth and communicate it
- Support Decision Making accurately and promptly.

Operation Audit Process ● Assurance - related to the auditors’

1. Planning ability to give confidence and make
2. Preliminary Review statements regarding the conditions
3. Fieldwork of matters within the organization
4. Analysis
5. Reporting ● Consulting - giving advice to
6. Follow up management and the board and
engaging in activities that helps the
Key Areas of an Audit Process organization resolve nagging
- Internal Control business issues.
- Audit Program
- Human Resources ● Designed to add value
- Management Control ● Help an organization accomplish
- Compliance Audit its objective
● By bringing a systematic,
Benefits of Operation Audit disciplined approach - refers to the
- Improve business performance approach followed when performing
- Identifies Risk and Opportunities the work
- Produces unbiased rights ● To evaluate and improve the
- Creates Motivation effectiveness

Challenges of Operation Audit

- Cost Money Auditing - a systematic process of
- Can temporarily disrupt operation objectively obtaining and evaluating
- Can be time consuming evidence regarding assertions about
economic conditions and events to
Types of Operations Audit ascertain the degree of correspondence
- Departmental Audit between these assertion and established
- Compliance Audit criteria and communicating the result
- Investigative Audit 1. A systematic Process
- Follow up Audit 2. It involves obtaining and evaluating
evidence regarding assertions
 3. It ascertain the degree of In terms of behavioral skills, Internal
correspondence between these Auditors should possess the ff skills:
assertion and established criteria 1. Confidentiality
4. It included communication of the 2. Objectivity
result to intended users 3. Communication
4. Judgment
Types of Audit 5. Workwell with all management level
1. Financial Audit 6. Possess governance and ethics
2. Operational Audit sensitivity
3. Compliance Audit 7. Be team players
8. Relationship building
Types of Auditor 9. Work independently
1. External Auditor 10. Team building
2. Internal Auditor 11. Leadership
3. Government Auditor 12. Influence
13. Facilitation
Operational Threats and Vulnerabilities 14. Staff management
1. Operational 15. Change catalyst skills
2. Technological
3. Strategic Key Objectively of Operational Audits
4. Environmental 1. New Rules
2. Poor performance
Skills required for Effective Operational 3. Compliance audit
Audit 4. Anomalies revenues or expenses
Top General Competencies of Internal
Auditor Planning of Operational Audit
1. Communications skills 1. Planning - Includes scoping,
2. Problem identification and solution budgeting, defining the population of
skills interest, how testing will be
3. Ability to promote the value of performed and announcing the audit
internal audit 2. Fieldwork - most of the testing is
4. Knowledge of industry, regulatory performed and it includes
and standards changes interviewing, documenting, applying
5. Organizational Skills testing methodologies, managing
6. Conflict resolution/negotiation skill fieldwork, and providing status
7. Staff training and development updates
8. Accounting frameworks, tools and 3. Reporting - communicating findings,
techniques observations, and best practices
9. Change management skills noted during the review, and
10. IT/CT 10 framework, tools and developing recommendations for
techniques corrective action
11. Cultural fluency and foreign 4. Follow up - checking to make sure
language skills the corrective action was performed
12. Confidentiality
Types of Audit Evidence
1. Testimonial - consists of verbal or
written statements or assertions
given by someone as proof
regarding the matter being
discussed.
2. Observation - Observe conditions
and dynamics related to the subject
of the review. Auditors visually
evaluate physical facilities,
conditions and practices to verify
they exist, their condition, valuation
and protection
3. Document Inspection - examine
documents to verify the date and
amount of transactions, agreements
made between various parties,
evidence of authorizations and
records of decisions made among
others
4. Workpapers - documents created
by auditors to record the work done