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Module 1, Part 1 OpAud-Synchronous, Definition, Characteristics

This course provides an overview of operational auditing. [1] It exposes learners to the principles and processes of operations audit, which focuses on benchmarking, performance indicators, and identifying performance gaps and opportunities for improvement. [2] Through case studies and discussions, learners will analyze operational data, identify issues and risks, and formulate solutions to enhance performance. [3] The goal is to determine if an entity is operating optimally or if there are wasted resources and lost opportunities.

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MA. CARMELLA VALDEZ
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104 views19 pages

Module 1, Part 1 OpAud-Synchronous, Definition, Characteristics

This course provides an overview of operational auditing. [1] It exposes learners to the principles and processes of operations audit, which focuses on benchmarking, performance indicators, and identifying performance gaps and opportunities for improvement. [2] Through case studies and discussions, learners will analyze operational data, identify issues and risks, and formulate solutions to enhance performance. [3] The goal is to determine if an entity is operating optimally or if there are wasted resources and lost opportunities.

Uploaded by

MA. CARMELLA VALDEZ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Gerardo M.

Castro, MBA
Operations Audit - ELE 1
Course Description
The conduct of an entity’s business operations must be effective, efficient and economical. To
assess whether they are, a review must be conducted by a person or entity independent of the
company. Operational audit aims to determine whether an entity is operating at its optimum level
because anything less optimal equates to opportunities lost and resources wasted.
 
This course exposes the learners to the principles of and the sequence of the processes of operations
audit, which focuses on benchmarking concepts, performance indicators and measurement
criteria, identification and analysis of performance gaps and opportunities and discussion of
benchmarking results with management.
 
Through simulated case studies and highly interactive group discussions, learners will identify
various tools and methods, analyze operational data and information, identify causes of
operational issues and risk exposures, and formulate solutions to enhance an entity’s operational
performance.
Definition and Characteristics
of Operations Audit
Intended Learning Outcomes
After completing this chapter, you shall be able to:
1. Explain the characteristics of operations audit.
2. Analyze the factors that influenced the changing
nature of operations audit.
3. Explain the concept of control-based and risk-based audit.
4. Explain the required skills in conducting an
effective operations auditing
5. Reflect on the important role of auditors in an
organization.
The Role of Operations Audit
Independent,
Objective
Assurance
Consulting service

Improvement
of Operations The manner this is
accomplished
has changed.
Organizational theories
Centralization
Internal Audit
Defined hierarchy
was consistent with
Distinct authority levels
these organizational
Reporting lines
theories
Clear rules
Division of labor
Standardization
the norm??

Checklists
Standard audit programs
procedures Internal Audit
only validated the
organization’s
operations system
Limits the auditor’s creativity!!
Financial
Globalization

Technology
Demographic

Competition
bl e m
r p ro
n o the Internal auditing replicated
A External auditing

Reviewing and redoing accounting procedures performed by


external auditors for the company’s financial report
publishing is wasteful !!
Stakeholder Corporate
theory c al l! Governance
k e-up
A wa
Sarbanes-
Cycle Time Oxley Act of
2002
C h a n g e s……. NOW

√ Healthier balance among Operational


reporting, compliance, IT, fraud, and
strategic topics.
√ Looking beyond immediate fiscal year
√ Taking a closer look at long-term Trends
and future implications of current
dynamics.
√ Identifying a wider set of essential
Skills.
√ Bringing in a wider skillset.
BEFORE
Challenge Among Auditors

There is still a lack of skilled resources due to the


changing role of internal auditors away from traditional
quantitative assessments and toward becoming a
qualitative assessor of the organization’s goals and
strengths.

Thomson Reuters Accelus (2013). State of Internal Audit Report


So…….
What is Operational Auditing?

Future- Improve
Oriented Profitability
Management
Independent
Management-Controlled
Systematic Attain
Organizational Activities
Business- Organizationa
Management-Controlled
Focussed l Objectives
Third Party Activities
Evaluation
What is Operations Audit?
Operational auditing is defined as “A future-
oriented, systematic, and independent evaluation
of organizational activities.

The Business Dictionary defines operational audit


as “A review of how an organization’s
management and its operating procedures are
functioning with respect to their effectiveness and
efficiency in meeting stated objectives.
What is Internal Audit?

Internal auditing is an independent, objective assurance and


consulting activity designed to add value and improve an
an organization’s operations. It helps an organization accomplish
its objectives by bringing a systematic, disciplined approach
to evaluate and improve the effectiveness of risk management,
control, and governance processes.

Institute of Internal Auditors (IIA)


Key Words

Achieves
Objective Organizational
Objectives

Independence Assurance Consulting


Key Words

Evaluates and
Improves
Improves
Organizational
Organizational
Operations
Systematic Effectiveness
and
Adds Value
Disciplined
Approach

Risk management
Control
Governance Processes
Source:

Murdock, H. (2017). Operational Auditing: Principles and Techniques


for a Changing World. CRC Press Taylor & Francis Group, London,
New York.

Note: This is the prescribed textbook for the course Operations Audit (ELE 1).
Thank You!

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