Operational auditing explained
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| Characteristics |
Objectives- To appraise the effectiveness and efficiency of a division, activity, or operation of the entity in meeting organizational goals.
- To understand the responsibilities and risks faced by an organization.
- To identify, with management participation, opportunities for improving control.
- To provide senior management of the organization with a detailed understanding of the result
Steps of operational auditGenerally Operational Audit involves following five steps;
- Preliminary preparation
- Field Survey
- Audit Programme Development
- Audit Execution
- Reporting and Follow-up
Advantages
- In addition to making the business more efficient and profitable in the long run.
- An operational audit almost always provides a company with some new, fresh perspectives.
- It makes executives aware of problems that might not have been found otherwise and lets them evaluate risks for the future.
- Managers also can use results to motivate employees, as the company always has something to work toward at the end of the process.
Disadvantages
- Reviewing operational processes can be very time consuming and costly.
- When employees and managers are working with the auditor, they can't do other activities that might benefit the business, so projects or production might slow temporarily.
- Sometimes, the changes that a business makes are hard for workers to get used to, which can increase conflicts or confusion.
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Operational audit is a systematic review of effectiveness, efficiency and economy of operation. Operational audit is a future-oriented, systematic, and independent evaluation of organizational activities.
In Operational audit financial data may be used, but the primary sources of evidence are the operational policies and achievements related to organizational objectives.[1] Operational audit is a more comprehensive form of an Internal audit.
The Institute of Internal Auditors (IIA) defines Operational Audit as a systematic process of evaluating 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; see aside.
See also
Notes and References
- Web site: Operational Audit . daf.csulb.edu . 2011-12-22 . 2013-12-28.
