AUDITING OF BUSINESS OPERATIONS II at IOB
What is AUDITING OF BUSINESS OPERATIONS II?
Whereas a regular audit evaluates financial statements, an operational audit examines how a company conducts its business, with the aim of increasing overall effectiveness. Operational audits could be conducted by outside specialists or an internal audit team.
Part of your business growth means encountering some room for improvement along the way. Operational audits allow you to evaluate the impact of internal control systems on each operational area by analyzing their potential.
Frequently Asked Questions
What is a business operational audit?
An operational audit is an examination of the manner in which an organization conducts business, with the objective of pointing out improvements that will increase its efficiency and effectiveness.
What is an example of an operational audit?
For example, in a dry-cleaning business, operations would include all work that contributes directly to cleaning customers’ clothing. An operational audit in this case would consist of an examination of those procedures used to complete the dry-cleaning process.
What are the three types of operational audits?
Normally, the internal auditor performs their review on the three key types including financial statements audit, compliance audit, and operational audit.
Which audit is a type of operational audit?
Financial Audits or Review: Financial audits focus on financial controls as they relate to reporting to internal and external governing bodies. Financial statement auditing is the bailiwick of external auditors.
What are the five phases to an operational audit?
What happens during an audit? Internal audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans.
What is the scope of operational audit?
The scope of operations for an internal audit program typically comprises all types of audits the organization conducts, including financial and non-IT operational audits as well as audits of IT controls, procedures, environments, and capabilities.
What is difference between operational audit and management audit?
Management audit deals with various aspects of the management process whereas operational audit is confined to various activities and operations in the functional areas. Management audit attempts to evaluate the performance of various management process and functions.
What is the audit process?
Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review. Client involvement is critical at each stage of the audit process.
What are audit activities?
Auditing is defined as the on-site verification activity, such as inspection or examination, of a process or quality system, to ensure compliance to requirements. An audit can apply to an entire organization or might be specific to a function, process, or production step.
Which of the following best describes an operational audit?
It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls. U.S. generally accepted accounting principles or International Financial Reporting Standards.
What is the difference between operational and financial audit?
Operational audits assess operating policies and procedures for efficiency and effectiveness. Financial statement audits determine whether the company has prepared and presented its financial statements fairly, and in accordance with established financial accounting criteria.
What is the difference between finance and auditing?
Auditor ensures that the businesses are saved from any fraud by highlighting any discrepancies undertaken in accounting methods whereas a Finance manager provide with accurate and detailed financial reports which are vital for the profitability of the business.
What are objectives of auditing?
Main Objective: The main objective of the auditing is to find reliability of financial position and profit and loss statements. The objective is to ensure that the accounts reveal a true and fair view of the business and its transactions.
Which of the following is a typical objective of an operational audit?
A typical objective of an operational audit is to determine whether an entity’s: a. internal control is adequately operating as designed.
What is the proper organizational role of internal auditing?
The role of internal audit is to provide independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively.