PORTFOLIO ASSIGNMENT WEEK 2
In this portfolio assignment, let's assess your knowledge about our topic.
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
For assistance with reflective writing, read How to Write a Reflective Paper.
The Portfolio Assignment entry should be a minimum of 500 words and not more than 1000 words. Use APA citations and references if you use ideas from the readings or other sources. This assignment is graded by your professor.
Please accomplish this assignment by commenting on this post. Deadline October 17, 2021
Yuga, Rhea Mae D.
ReplyDeleteCBET-01-501A
1. Operational auditing requires a lot of skills that was needed to ensure the reliability and credibility of the report. Aside from these skills, phases of operational auditing are also vital to the internal auditors for them to provide effective and efficient result. Based on the readings, there are five phases that followed by the internal auditors. These phases are important to evaluate the company’s internal policies and procedure, and identify trouble spots to operate more effectively. As an internal auditor, careful planning and an atmosphere of useful involvement and communication between the client and Internal Audit is considered as a successful audit. Internal Auditor’s main objective is to involve client management throughout each phase of the audit. Management’s participation can result to a better understanding of unit operations and a more effective implementation of recommendation. The important phases for me not to be taken for granted is planning, execution, and reporting. Planning phase is a crucial part of audit success. During this phase, Internal Audit assess the management to identify risk, determine preliminary audit objectives, establish an audit timeline and discuss audit deliverables. This aims to obtain an overview of the client’s operations, practices, and policies. Hence, the information that they gathered is uses to refine the audit objectives and the audit programs. Another phase is execution or field work according to some references, here, internal auditors do the analysis and evaluation, transaction testing, and informal audit observations and recommendations. Accordingly, system analysis and evaluation emphasize in assignment of duties, the approval process, and the reporting structure. Transacting testing is where an internal audit team selects a sample of transactions and then gathers and inspects sample documentation for evidence compliance with stated procedures and practices. While audit observations and recommendations are conducting a meeting to clarify any misunderstandings, to enlist management’s support in solving any problems discovered, and to ensure timely implementation of recommendations. And lastly reporting, this phase is focusing on discussing the report states the audit objective(s), the audit tests performed, the results of the audit tests, and recommendations for improvement. Those three phases are the key structure to make the audit report works effectively and efficiently.
2. With the re-emergence of the election season. Many controversies are again attributed to politicians. ABS-CBN renewal is one of them, many say that once there is a new president, the ABS-CBN franchise can return. And because of this I want to know as an internal auditor whether the said corporation is in violation of the law or just because they have a disagreement with the current president. As internal auditors we work to provide credible and reliable information that can be used by the organization, government and even the people in making decisions. Most Filipinos today are still unsure of the reason for the loss of the franchise of the big corporation so I want to be one of those who can give them an answer about it.
ReplyDelete3. To ensure audit effectiveness of my chosen company to audit, here are the operational audit checklist that I found in the internet. This is based on Go Cardless, it includes: select and screen auditors, define audit plans and scope, pull together references documents, identify administrative support, research operational procedures, collect statistical evidence, audit evidence from all sources, evaluate evidence, compile audit findings, share audit conclusions, give actionable advice, and follow up with questions and concerns. This procedure must meet to manage a better flow of the audit.
References:
Accountants Go Cardless (n.d.). What is an operational audit? Retrieved October
12, 2021 from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Grabillo, M. A. (2021). Operational Audit: What are its Phases?
https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Internal Audit. (2015, July 27). Audit Phases. West Virginia University.
https://internalaudit.wvu.edu/audit-services/audit-phases
GUASIN, Jerick E.
ReplyDeleteCBET-01-503A
How & Who to Audit?
In week one, we have learned the definition and the importance of operations audit. At this point, we have to consider the phases that operational auditing goes through. Operational auditing phases are as follows: planning, risk assessment, audit strategy and plan, gathering evidence, and finalization (PwC, 2017). In no doubt, I must say that all of them will surely make a great impact in doing the operational audit. However, two of them have to be taken seriously and not for granted and these are the phases namely risk assessment and gathering evidence.
In risk assessment, this has to be done with prudence for it will not examine only the risk, but of the general management. Whereas the auditor's knowledge and degree of judgement in this phase has to be considered greatly, for he or she will be identifying the risk that could lead to misstatements which are material in the company’s financial statements. It additionally implies that the auditor should be very much educated with regards to the business and more extensive environment, in which the organization works, and regarding with that of its rivals, clients, providers also - where significant - controllers are doing. On the other hand gathering evidence, as discussed and as per my reading entitled “Understanding a financial statement audit”, the auditor must not be easily persuaded or satisfied with the things presented, he or she has to be skeptical, in which everything must have its evidence be it in “combination of testing the company’s internal controls, tracing the amounts and disclosures included in the financial statements to the company’s supporting books and records, and obtaining external third party documentation.”
The company that I want to conduct an audit would have to be BDO Unibank, Inc., aside from the wealth they maintain they also make sure that they take good care of their records and employees. If I would create an operational audit checklist of procedures to ensure that the audit is effective, I will follow the framework presented by Eby (2017):
CHECKLIST FOR OPERATIONAL AUDIT PROCESS:
Plan
> Select Competent Auditors
> Screen Auditees
> Define Audit Plans and Procedures
> Define Purpose and Scope
Do
> Reference Documents
> Identify Administrative and Infrastructure Support
> Collect Information
Audit
> Audit Evidence
Check
> Evaluate Against Criteria
> Audit Findings
> Review Findings
Act
> Present Report with Conclusion and Actionable Information
> Follow-up to Answer Questions and Concerns
> Follow-up Audit
Furthermore, although the presented checklist may be not applicable to all companies, every part can be separated into activities be it plan, do, check, and act depending on the size and scope of the organization or company you are performing the operational audit.
Naturally, operational audits are tied in with recognizing the details that uncover the qualities and shortcomings of an association's everyday strategic approaches. Hence, to sum things up, the entire process of operational auditing looks tedious and might take a long time, but with the help of immediate planning and extracting the process it will be easier for the auditor to do so. All these are possible, since we have learned that the very essence of an audit is to have valuable information, clarify the management policies, and keep the company at utmost performance.
References:
PwC. (2017, May). Understanding a financial statement audit.
https://www.pwc.com/im/en/services/Assurance/pwc-understanding-financial-statement-audit.pdf
Eby, K. (2017, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
MACANIP, JOANNA ELAINE O.
ReplyDeleteCBET-01-501A
All the phases of Operational Auditing are essential, but I think the two phases that should never be taken for granted are planning and conducting fieldwork. An auditor's foundation will be planning, which will assist them in achieving their goal. According to Ramachandran (n.d.), auditors must prepare ahead of time for the audit's timeframes so that they may offer management a preliminary completion date for their report's publication. In addition, the audit is designed in terms of what the audit's goal is and what criteria are ideal for achieving that goal. Risk assessment is also part of the planning phase. Auditors examine different risk factors such as financial, compliance, operational, reputational, health and safety, and organizational value protection to gain a better knowledge of the firm and its environment. The audit planning phase is of paramount importance because it assists auditors in developing and presenting a realistic strategy that will enable them to meet the needed objectives on time. It also ensures that they can properly assess the key risks connected with the audit process to plan and devise risk mitigation strategies. On the other hand, conducting fieldwork will be the implementation of the plan where auditors will gather information about the process to be audited. They will document and evaluate processes and internal controls; develop and perform detailed testing and analysis of data; evaluate audit evidence to develop conclusions. According to Zimba (n.d.), fieldwork is the phase of the process in which transactions, papers, and records are examined with the goal of ensuring that the controls put in place by administration are in place, adequate, being followed, and working efficiently. After conducting the fieldwork, an exit meeting will be held to review the audit findings and, if necessary, identify relevant corrective action measures that the company needs. These two phases are crucial components of an organization's entire process for achieving its purpose.
I think the company that I would like to audit is the Philippine Health Insurance Corporation (PhilHealth) because with the current issue in our health, I think it is important to have health insurance. Their objective is to provide social health insurance to every Filipino, regardless of socioeconomic status: poor, affluent, young, elderly, sick, healthy, employed, or unemployed. With this, I believe citizens should be given a chance to obtain such insurance. PhilHealth's mission is to enhance access to high-quality treatment while lowering out-of-pocket costs. Health insurance like PhilHealth can be used as safety net wherein it can help people to cover up cost that is unlikely to be paid immediately. Early intervention can help avoid future issues and possibly save lives.
MACANIP, JOANNA ELAINE O.
ReplyDeleteCBET-01-501A
With the controversy surrounding 15B, which has been suspected of being pocketed by PhilHealth, it would be an excellent opportunity to examine and correct any anomalies in their operations. According to Kandarpa (2021), the goal, audit type, and audit criteria all influence the checklist. The auditing method and concepts, on the other hand, remain consistent. The checklist is split down into different activities such as plan, do, check, and act (PDCA) to guarantee a successful and effective operational audit. The first one is planning, it includes the selection of competent auditors, screening auditees, defining audit plans and procedures, and defining purpose and scope. Do has its checklist such as knowing the reference documents, identifying administrative and infrastructure support, collecting information, and auditing of evidence. On the other hand, operational auditors use the check activity, which includes evaluating against criteria, audit findings, and reviews findings. Lastly, under the act, auditors present reports with conclusions and actionable information, a follow-up to answer questions or concerns, and a follow-up audit. This checklist may be a useful tool for gathering essential documentation, defining objectives with the team, and keeping important stakeholders informed, according to the goal of the organization.
References:
Eby, K. (2021, July 19). Operational Audits 101: Processes, Examples, and Checklists. Retrieved October 12, 2021, from https://www.smartsheet.com/operational-audit-process.
Imoney. (2020, May 7). PhilHealth: Universal Health Coverage For All Filipinos. Retrieved October 12, 2021, from https://www.imoney.ph/articles/everything-about-philhealth-contribution-philippines/.
Ramachandran, A. (n.d.). What is the Audit Cycle?. Retrieved October 9, 2021, from https://www.wallstreetmojo.com/audit-cycle/.
Wiki Accounting. (n.d.) Why Audit Planning Is So Importance? (Explained). Retrieved October 9, 2021, from https://www.wikiaccounting.com/importance-audit-planning/.
Operational Auditing ensures efficiency and effectivity in the course of business. They look thoroughly and deep-dive in to the arose problem and think of a plausible solution. Operational Auditors contributes in the smooth flow of the business. To verify that those can be achieved, they have phases of operational auditing that they follow- Selection, Planning, Execution, Reporting, and Follow up. Every single phase is important but the two phases that I think is more critical and cannot be taken advantage are Selection and Planning. Identifying a problem can be done easily by retracing the past activity in an organization but calculating the risk is another story. Selection phase is where the internal auditor do the risk assessment. It is a very crucial phase because if the risk are miscalculated or be taken lightly then it can result to drastic changes or even the fall of a business. Planning is also as important because this is where you gather all the evidences that will support your risk assessment, planning or the solution. You need not to take this lightly for it identify the objectives, scope of the audit as well as the timing of fieldwork and the report distribution.
ReplyDeleteAs what we have learned from our International Business and trade subject, it is important for us to study global business so that we can have a perspective on what a business drives successfulness and failures. That is exactly how I feel with big businesses that has been in the long run in the course of business. Hence, my last minute made up quote, "Starting a business is easy but making your business stand strong despite of the challenges and the tough competition it encounters is another story". Moreover, the company the I want to perform an operational audit is the Manila Electric Company. Manila Electric Company, famously known as Meralco, has made countless of adjusted measures when the pandemic escalated. We have experience the struggles they have encountered since we are the one's who uses their services. As a person who has experience inconveniency, I would love to explore and learn with them as problem arises. Having to work on a company with a service that is needed by most of the people will be a big privilege and experience for me as an operational auditor.
With the company that I have choose in performing an operational audit, The checklist that I have provided includes: First, the Screen Audit project followed by performing of an audit based on internal so that you screen and have an understanding why this project is approved. Next is the identification of the relevant risk in the project presented. After that, I'll have to do a background information check and identify the scope and purpose as well as the objectives of this project. Thereafter, outline and validation of flowcharts then proceeding to the execution in the fieldwork. The result of that process and the potential findings, recommendation, inspection, and the re-performances are to be summarized then do a follow up report on the people involved.
References:
Mark Grabillo. 2021. OPERATIONAL AUDIT: WHAT ARE ITS PHASES. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Auditboard. Audit Checklist: How to conduct an Audit Step by Step Retrieved from. https://www.auditboard.com/blog/audit-checklist-how-to-conduct-an-audit-step-by-step/.
ASHLEY P. HABON (2019-102695)
Thea Sofia A. Barabicho
ReplyDelete1)
All of the operational auditing phases have the same importance. It cannot function and operate effectively if one phase has been skipped or cancelled out. However, of all the phases of operational audit, I think that Planning and Follow-Up, which is the first and last step, should never be taken for granted.
Personally, whenever I organize or do things, I always plan ahead of time. It helps me organize my thoughts and how I respond to certain acts. As an operational auditor, planning is very important because it facilitates the direction and management of the team. Planning also helps the company chunk big objectives into smaller goals and plot its time frame. Through this, it shows the organization’s progress and sees to it that it is done in advance. Once the overall strategy has been planned, a company can focus on giving the smaller objectives different methods on how it should be taken care of.
I would also like to focus on the Follow-Up phase because information obtained is nonsense if it is not acted upon or considered. All of the operational auditing phase will go to waste if its problems are not addressed, strengths are not maintained, and risks have not been mitigated. The sole purpose of adopting operational auditing is to improve and aid the current state of a company, and it will only be done by carefully examining every little aspect in the organization. I also remember what a student leader from my high school said, “A problem raised is nothing if it is not addressed by the authorities.” Problems are always present and it can never be eliminated completely, however, it can be reduced through the proper response of the higher up and that is how change and improvement are effected.
2)
If I were to choose a company that I would like to audit, I want to audit San Miguel Corporation’s financial statements. Ever since I was a child, I was amazed at how big the company is. Upon growing up, we have also been asked what companies pique our interest most and through searching about many company’s backgrounds, I am truly in awe with San Miguel Corporation’s management, vision, and mission. I tried to search about San Miguel’s auditing and I stumbled upon their Charter of Internal Audit. I was surprised to see that independence, objectivity, and standards of professional practice are one of the contents of their charter. Through this, it could be perceived that the corporation manages its audit with integrity and exercises due professional care.
3)
To make sure that the operational audit of San Miguel is rendered effectively, an operational auditor must provide a checklist of procedures. Since Operational Auditing is systematic and future-oriented, there should be a unified process which the company can apply and follow. I will base my checklist on the four stages of the Deming cycle which consists of Plan, Do, Study, and Act. Like every other process, it all boils down to the planning stage. Our professor in Operational Auditing, Mark Anthony Grabillo, once said, “Audits without a plan is like playing without a goal.” Audits to be performed should be defined as it will be the main focus.
Moreover, the do part comes in next. The auditors should start to execute the plan in order to identify results. Once the execution is on-going, they should write notes and keep record of what happened in order to determine what method works best and gives the most effective results. Since there is sufficient information and results, the auditors can now decide to implement the most operative and effective solution and disregard what renders the company inefficient. It is like a follow-up wherein the auditors check and make sure that corrective actions were performed.
Obtaining an effective audit is quite difficult to achieve but not impossible. It does not happen overnight as it takes a lot of various solutions and methods to achieve the best results. However, it can be attained through practices and experiences, and with proper guidance from the senior auditors in the company.
This comment has been removed by the author.
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteI believe that there are at least two phases that are extremely crucial and should never be overlooked: planning and reporting. Because the selecting, assessing, planning, reporting, rephrasing, and executing are all included in these two processes. Because the planning phase is where we have previously conducted a possible outcome that must be carried out. We can build a move/plan that is organized to the extent of the company's needs throughout the planning process. Internal audit meets with management at the start of the audit to review the audit's purpose, risk factors, and other logistics. We can present plans we conducted in order to be implemented through the reporting phase, and we can also address other concerns by expanding the coverage to solve any issues. The reporting phase is where we communicate in order to present the company's plans for success. Auditors inform management of these issues via an audit observation memo and request a response from management, along with a corrective action plan and deadline for implementation. The final report includes these responses. Management and leadership are given the opportunity to evaluate and comment on drafts.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
The company that I would like to audit is PETRON CORPORATION because Petron Corporation is the largest oil refining and marketing company in the Philippines and is a leading player in the Malaysian market. And I really wanted to know how Petron company continuously growing, and how their company working in terms of their resources, finances and workforces.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
This is an operational audit checklist to help you audit effectively. The first step is to define audit plans and scope because this will help you determine what needs to be developed and what other issues need to be addressed. Also, gather reference materials; by doing so, we will be able to verify and organize the documents we are working with. The next step is to look into operational methods to see if there are any that are more dependable and convenient. Audit evidence from all sources, as this is the evidence that will be required to be relevant and fair. Also, evaluate evidence so that we can determine if we are meeting the company's needs. The next step is to compile audit findings, which will serve as our foundation if growth occurs. Also, share audit conclusions; this process is necessary since sometimes judgments are wide, but by assessing and sharing, we can arrive at a better conclusion. The next step is to give actionable advise, which refers to putting all of the information we've gathered into practice, and finally, to follow up with questions and concerns, which will help us improve our skills as auditors.
References:
Office of Internal Audit. Audit Process. (n.d.). Retrieved October 2021, from https://internalaudit.uoregon.edu/report/audit-process.
GoCardless. (n.d.). What is an operational audit? United Kingdom. Retrieved October 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/.
Capinlac, Carl Angelo SJ (2019-102322)
CBET-01-502A
This comment has been removed by the author.
ReplyDeleteGenelyn Aloroy
ReplyDeleteCBET 01-501A
1. The two phases that I think is very important is planning and fieldwork. Firstly, planning because it is an initial phase in auditing. Planning is arguably the most important part of an audit. The proverb: “Failing to plan is planning to fail” comes to mind (Murdock 2017). Scoping, budgeting, identifying the demographic of interest, how testing will be conducted, and publicizing the audit are all part of the planning process. Planning is considered as vital area in audit process because it is the benchmark for the subsequent phases. Generally, audit planning will contain sections on business understanding, risk assessment methods, planned audit procedures (i.e., solutions to recognized hazards), and other necessary audit procedures. It is essential to have a scrupulous planning in auditing to come up with an excellent audit report. Secondly, I think the second most important in audit phases is fieldwork, also referred as evaluation phase. It is an audit phase where the majority of the testing is done. This phase comprises interviewing, documenting, applying testing techniques, organizing fieldwork, and issuing status reports. Also, it identifies and analyzes key risks within the audit process or system and evaluating the controls on how to mitigate the risks. I find these two audit phases essential and should not be taken for granted because if these two phases were not implemented, then audit reports will result into inaccurate and inconsistent resulting in an unreliable audit report.
2. I would like to conduct an operational audit to the D&L Industries Corporation. D&L Industries is manufacturing company that produces a wide range of products including food components, personal and home care chemicals, plastic raw materials and aerosol products. The reason why I want to audit this company is due to various reasons. First, it is my dream to work in this company since I was in grade school because I am their scholar since then. Second, considering that it is a big manufacturing company, it fits to the aim of operational auditing to assess the company’s operating activities due to its operational diversities (production of goods, promotional campaign, sales and customer service) in various sectors which would allow me to acquire more knowledge and skills in my chosen field.
3. As an auditor that ensures the effectiveness and efficiency of company's operations, I will provide the following operational audit checklist of procedures:
Production department:
- constant engagement with suppliers
- check the staff performance
- inventory management and monitoring
- quality of raw materials
- check alternative source of raw materials
- maintenance procedures
- training programs of production-employee
- quality of processing procedures
- documentation report for the worker's performance
- quality of technology and machineries used
- compliance with environmental protection and regulatory framework
Marketing department:
- analysis of competition and customers
- quality of promotional content
- publicity engagements
- usage of online platforms in promoting product
Sales Department:
- effectiveness of sales personnel
- usage of sales channels and correspondence with clients
- quality of pricing strategy used
Customer Service Department:
- usage of customer feedback for the enhancement of operations
- maintenance customer satisfaction
- quality solution provided for customer complaints.
References:
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Taylor & Francis group.
D&L Industries Inc. (2021). Inspired by the Future, for the Future. https://dnl.com.ph/
Pirraglia, W. (2017). Operational Audit Checklist. https://bizfluent.com/list-6589932-operational-audit-checklist.html
1. All phases of the operational audit are important, but if I had to choose two phases that are very important and should never be taken for granted, these two would be planning and fieldwork. Planning is important because this is where the audit phases start. I also agree with the saying from The proverb: "Failing to plan is planning to fail" (Murdock 2017). Without a plan, you don’t know where, when, or even how to start anything. Planning is, without a doubt, the most vital aspect of an audit. It assists the auditor in obtaining adequate and appropriate information for any circumstances. It also aids in keeping audit expenses down to a manageable level. In addition, it helps in the avoidance of client misunderstandings and in identifying potential problems. Furthermore, knowing the scope of an auditor's audit program is beneficial. It supports the efficient and well-defined execution of audit work. Good planning and effective alignment of people, processes, and technology are required for achieving success.
ReplyDeleteThe second one is fieldwork. It is also important, in my opinion, because as an operational auditor, you need proper evidence, documents, or information to reach a conclusion and make a good recommendation for the company or organization. Also, don’t forget the goal of operational audit is to optimize efficiency. And to achieve that goal, we need to be on hand, we need to know whether the program or policies are being implemented or achieved. This phase entails determining the adequacy of internal controls and compliance, as well as testing transactions, records, and resources, and also other procedures required to meet the auditor's objectives.
2. If I am given a chance to audit one company here in the Philippines, I want it to be Nestle Philippines. I always hear about Nestle Philippines from my former professors because they used to work there and they have a good impression of it. Nestlé Philippines, Inc. (NPI) is a strong and stable company that is proud of its role in offering the best food and beverages to Filipino consumers. From that, I want to know how they maintain their stable organization and how they conduct their business and what kind of policies are being implemented.
3. As an operational auditor to make sure that Nestle Philippines will have an effective and precise audit, I have included here these operational audit checklists I found on GoCardless. These include: selecting and screening auditors; defining audit plans and scope; pulling together reference documents; identifying administrative support; researching operational procedures; collecting statistical evidence; audit evidence from all sources; evaluating evidence; compiling audit findings; sharing audit conclusions; giving actionable advice; and following up with questions and concerns. Through this operational audit checklist we can guarantee an efficient and effective audit result.
References
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Taylor & Francis group.
The top 10 corporations in the Philippines (for job hunting) ~ ifranchise.ph. iFranchise.ph. (2017, June 9). Retrieved October 12, 2021, from https://ifranchise.ph/top-10-corporations-in-the-philippines/.
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 12, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
- CATHERINE BULING (2019-103626)
Before we discuss the phases of Operational Auditing, we need to discuss first what is Operational Auditing? According to Grabillo (2021), Operational Auditing is the process of evaluating a company’s operating activities – both on a day-to-day level and a broader scale. It is beneficial for the company to know whether they are on track with its goal or not. Operational Auditing helps them determine if they are indeed on track or if not, what else could they do to stay on track.
ReplyDeleteNow we know what Operational Auditing is, we can now move on to the phases of it. According to Grabillo (2021), there are 5 phases of operational audit namely Selection, Planning, Execution, Reporting, and Follow-Up.The two most important phases of Operational Auditing are Selection and Planning. As auditors, we need to identify the risk ahead of time and “if we fail to plan, we plan to fail”. This quote is very old but is still relevant because each day there are risk that arises and it help us to manage this said risks if we have a contingency plan ahead of time. We select what we need to do and we plan on how we execute it.
For me, I want to audit PhilHealth under the Department of Health (DOH). I would like to know the schemes they went through to justify them spending P15 Billion. It is a huge amount of money to invest on something and why aren’t we experiencing any of that said P15 Billion they used. This is more likely a corruption scandal rather than a investment. That is why I want to personally audit it. According to anonymous (n.d.), there are 12 operational audit checklist of procedures namely: Select and screen auditors, Define audit plans and scope, Pull together reference documents, Identify administrative support, Research operational procedures, Collect statistical evidence, Audit evidence from all sources, Evaluate evidence, Compile audit findings, Share audit conclusions, Give actionable advice, Follow up with questions and concerns. These 12 procedures will help me identify what went wrong or who could I trust or rather trust anyone from the company. Gathering data will be hard especially if you are alone. Selecting and screening auditors will help you along the way especially this kind of jarring task. Next, we turn to the plan and how are, as a team, going to execute it. Next, we gather reference documents on what they bought and see if it matches. Next, we identify who said yes on buying the said equipments and put the large weight on them. Next, we collect the statistical evidence that supports their saying and if the price matches as well. We compile the findings and report it. We come up with sound conclusions and advices or show their mishandling of the people’s funds. This is not for the faint of heart. You are battling the corruption of a government branch and it will surely change your life but then again, their actions are changing the lives of not only us, but also the lives of future generations.
Sources:
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Anonymous (n.d.) What is an operational audit? https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Hans Theo Ezequiel N. Valenzuela 2020-110421
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDelete- For me the two phase that are important are Selection phase and Reporting phase.
Selection is an important process because hiring good resources can help increase the overall performance of the organization. The purpose of selection is to choose the most suitable candidate, who can meet the requirements of the jobs in an organization, who will be a successful applicant. R K. (2020). Talent management (For MBA). Shanti Publication. References You have no saved citations.
Reports will provide important detail that can be used to help develop future forecasts, marketing plans, guide budget planning and improve decision-making. Additionally, regular reporting throughout the business year enables businesses within the same sector to measure and compare their performances against others. Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting volume 2 - Managerial accounting.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
- The company I want to conduct an audit is BDO Capital and Investment Corporation, because it is an investment banking firm. The Company provides services such as trading and underwriting securities, loan syndication, financial advisory services, and project finance services. Tansey, C., Swack, M., & Tansey, M. (2010). Capital markets, CDFIs, and organizational credit risk. Carsey Institute. Their purpose is to help clients meet their financial objectives. Their goal is to be the best in what we do as individuals and as a firm. Their ideas should be innovative yet appropriate for our clients' needs. Sunderland, R. (2012). Fmos guide to running your own business. Random House.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
CHECKLIST FOR OPERATIONAL AUDIT PROCESS: Plan > Select Competent Auditors > Screen Auditees > Define Audit Plans and Procedures > Define Purpose and Scope Do > Reference Documents > Identify Administrative and Infrastructure Support > Collect Information Audit > Audit Evidence Check > Evaluate Against Criteria > Audit Findings > Review Findings Act > Present Report with Conclusion and Actionable Information > Follow-up to Answer Questions and Concerns > Follow-up Audit
References:
https://www.bloomberg.com/profile/company/1139Z:PM#:~:text=BDO%20Capital%20and%20Investment%20Corporation,services%2C%20and%20project%20finance%20services.
https://www.unleashedsoftware.com/blog/why-business-reporting-is-important-for-business-success
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteAn internal auditor conducts an audit to analyze if the organization is operating efficiently and effectively. The audit itself consists of different phases and each is significant to achieve their goal which is to provide findings or observations regarding the organization and create a recommendation relating to it. Hence, there is no doubt that all audit phases are seen to be essential to produce a high-quality audit. However, in my personal view, these two phases that I will mention are the most crucial compare to other phases. These two are planning and reporting.
According to Munro (2021), The internal audit planning process provides a multitude of benefits to an organization. For example, spending the time to establish a clear audit plan enhances the purpose and objective of the audit engagement. Moreover, fine-tuning the internal audit planning process year after year can expose risks that pose a major threat to an organization. She also states that the planning phase is also an opportunity to alert organization executives of these risks and communicate the audit plan so that business and strategic objectives remain aligned. Inefficiencies and expenditures in conducting an audit can be considerably mitigated if the internal audit planning is done more effectively.
On the other hand, reporting is considered to be one of the most important audit phases as it serves as the communication for the findings made by the internal auditor. Through internal audit reports, various examinations and conclusions are all well-presented for the sake of the stakeholders. It is a well-known fact to every auditor that each report they produced should be done with due care since they serve as the basis or guide by the management and other users of the said report in creating some critical decision-making. In fact, those people working in top-level management are busy most of the time. Thus, it is the task of the auditor to submit a professional, high-quality audits report. As stated by Smith (2010), care should be taken in delivering an audit report to protect the integrity of the report and the confidentiality of the information contained therein. Audit reports are considered a controlled document and should be maintained in accordance with approved practices, but minimally until the next scheduled audit of the same area.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
Among the largest companies in the country, I am planning to hold the position of an internal auditor in Jollibee Foods Corporation (JFC). Ever since childhood, I am a big supporter of every product they introduce to the public. In my view, all the foods and beverages served in Jollibee are excellent in terms of taste and cleanliness. So as an aspirant internal auditor, I am interested to find out what policies, procedures and systems are they using in order to maintain their success in the food and beverages industry. Moreover, conducting an audit in JFC will be quite challenging and not an easy task for me. It is not uncommon for everyone that JFC already established their position in the market, so there is an expectation for the internal auditor to do their job without failure or any mistakes with their evaluation. Despite the intense pressure in work, my original plan to conduct an audit in a huge corporation like JFC will never change as I firmly believe that they will serve as a stepping stone to many opportunities.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
ReplyDeleteTo find out what specific elements are needed to address in the operational audit of Jollibee Foods Corporation (JFC), an internal auditor will use a checklist. To begin with, the auditor must plan the audit process. There shall be a meeting first with the managers of JFC for the auditor to explain their whole audit procedures and methods. At the same time, the auditor also acquires a clear overview and understanding of the operations of the business. In addition, the auditor determines the objective, scope and timeline of the audit through the meeting, and they can figure out those areas that require special attention and demand further improvement. Afterwards, they need to establish certain goals and strategies that will support to attain the overall objectives of JFC. After the planning stage, the auditor will now proceed to fieldwork. They will examine and observe the business areas that were emphasized in the audit program. It is their task to collect and gather information regarding the existing procedures and processes of the day-to-day operations of Jollibee by observing the employees doing their normal routine in work and conducting an interview with the managers and employees. After the evaluation of the procedures and processes utilized by the business in their daily operations, they can now establish tests to assess their observations. Through the help of these tests, the auditor will determine multiple risks and other specific factors that require improvement or modification. The auditor shall construct a better solution that will help to mitigate or eliminate the risks and improve the overall procedures and process of JFC. On the next audit phase which is the reporting, the auditor will present the audit report about their conclusion and findings in the normal operations of Jollibee. They will also provide recommendations and draft an implementation plan to assist the management to achieve its objectives. These recommendations are being discussed with the managers so that they have a depth understanding of the content of the audit report. Since an audit report has already been produced, the auditor will schedule a meeting with the management of JFC to confirm the implementation of management’s action plans for solutions and corrective actions that were agreed upon by each party.
REFERENCES:
Guide to operational auditing: Definition, process, advantages and disadvantages. (2021, February 23). Retrieved from https://www.indeed.com/career-advice/career-development/operational-auditing.
Munro, N. (2021, February 16). Why Is Internal Audit Planning Critical To An Effective Audit? Retrieved from https://linfordco.com/blog/importance-of-internal-audit-planning/.
Smith, J. L. (2010, June 1). Ensure effective quality audit reports. Retrieved from https://www.qualitymag.com/articles/87347-ensure-effective-quality-audit-reports.
STEPHANIE A. BALAYSOCHE (2019-101856)
1. The phases of Operational Audit are Selection, Planning, Execution, Reporting and Follow-Up (Grabillo, 2021). These phases are an important process to have effective and efficient operations that can help every organization. However, there are two important phases that we should never take for granted. These are planning, and reporting. I chose Planning as one of the important phases that we should never take for granted because this is where all the audits will take place. In planning, we first define audits to be performed and with that we can create an audit plan. We should also define the end goals, and set realistic targets. The other phase that is very important is the Reporting. In reporting the communication of results will take place. It includes sharing the review's findings, insights, and best practices, as well as making recommendations for corrective action. This is very important because this is where questions will arise to arrive at an effective result. What did the auditor discover in the result? Is there an effect or impact to the organization? What are some recommendations to correct the condition so the performance will be consistent with the criteria? Those questions will help the auditor to check if the flow is good and effective.
ReplyDelete2. There are so many companies in the Philippines that are providing experiences and skills about auditing. They will give experiences and knowledge on how to face challenges in every situation happening in their organization. And what are the things needed to keep in mind to be an effective and efficient auditor or employee in to their organization. In my case I would like to audit Globe, Inc. I commend them for having an effective risk management, and efficient audit system. According to The Manila Times (2013), Globe Telecom's internal audit team received the highest quality evaluation rating, indicating that the telecoms business is working to enhance its corporate governance. Based on the report, Carmina Herbosa, Globe chief audit executive said that Globe Telecom is dedicated to pursuing integrity, accountability, and transparency in all aspects of the business, and the external quality review will ensure that the company's internal audit systems and procedures follow industry best practices. Until now, they are still doing well in auditing. They still value having a good internal control, and strong audit system. This is my reason why I want to audit Globe Telecom; I know I will learn a lot of things and skills in their company.
3. An operational audit's exact areas of inspection will vary depending on the sort of organization being audited. For smoother flow, here's a fast operational audit checklist of procedures. Auditors must be chosen and screened. Define the scope and plans for the audit. Compile a list of references. Recognize administrative support. Investigate the operational procedures. Obtain statistical proof. Examine evidence from all possible sources. Examine the evidence. Compile the results of the audit. Discuss the findings of the audit. Give suggestions that can be implemented. Questions and concerns should be followed up on (Accountants Go Cardless, n.d.).
REFERENCES
Accountants Go Cardless. (n.d.). What is an operational audit?. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Teacher Jeannie. (2021, September 11). Auditing: OBJECTIVES & PHASES OF OPERATIONAL AUDITS 09112021 by MJBC [Video]. YouTube https://youtu.be/7aUabD77FvI
The Manila Times. (2013, December 18). Globe audit system gets recognition. https://www.manilatimes.net/2013/12/18/business/globe-audit-system-gets-recognition/61625/
-Jennalyn P. Batjer (2019-101439)
AIRON NICOLE T. JADRAQUE
ReplyDeleteCBET-01-501A
2019-101826
First of all, I want to start with what the audit phases are. There are five audit phases or processes according to Grabillo (2021) stated in his blog which are: Selection, Planning, Execution, Reporting, and Follow-Up. In line with this, for me the two most important phases are selection and then planning.
Selection Phase means internal audit conducts a University-wide risk assessment near the end of each calendar year. We develop the audit plan for the subsequent year based on the results of this assessment and the department’s available resources. The Chancellor and the Fiscal Affairs and Audit Committee of the Kansas Board of Regents review the audit plan before it is executed. Planning Phase, during this phase of each project, the internal audit staff gather relevant background information and initiate contact with the client. Auditors meet with university leadership and clients to identify risks and determine the objectives and scope of the audit as well as the timing of fieldwork and the report distribution (Grabillo, 2021).
The reason why I have chosen these two is because I firmly believe that for every finished report and or any other outcomes, the cause or where it all started is the crucial one and that needs to be taken seriously. Everyone may come up with a report or study but not everyone can do it exceptionally and in a well-thought-out manner. As an auditor, we have to execute a very professional attitude when working and be smart and efficient thus, for us to execute a report we must enhance our foundation and this align to the phase or concept of selection and planning. A work of report without careful selection and thorough planning is as ineffective and inefficient compared to when being done with selection and planning and should not be taken for granted at all.
The company that I would like to audit is Jollibee Foods Corporation. I honestly do not have any idea or preference at all on which company I would audit but my reason why I have chosen this is mainly because it is popular and basically everybody has a good memories with it, also I think the nature of this business, which are service and manufacturing, is more appropriate, applicable and or easy to scrutinize in accordance with the operational auditing other than any businesses that are present today.
According to (What is an Operational Audit?, n.d.), the specific areas of scrutiny in an operational audit will depend on the type of business being audited. A quick operational audit checklist of procedures are as follow: Select and screen auditors; Define audit plans and scope; Pull together reference documents; Identify administrative support; Research operational procedures; Collect statistical evidence; Audit evidence from all sources; Evaluate evidence; Compile audit findings; Share audit conclusions; Give actionable advice and; Follow up with questions and concerns.
JFC or Jollibee Foods Corporation is adhering with the operational audit checklist procedures as I searched and studied their company. Their audit is effective and efficient and they are guided by auditors and other professionals that are excellent in their profession.
References List:
Grabillo, M. A. (2021). Operational Audit: What are its Phases? Blogspot. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
What is an Operational Audit? GoCardless. Retrieved October 12, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
1. An operational audit entails an evaluation of the activities conducted by individuals in the pursuit of a program's or process's objectives, which is frequently facilitated by a range of instruments (Murdock, 2017). Operational auditing follows a series of phases that are routinely observed to maintain the efficiency of the company's operational activities. Every company practices these phases as it offers a simple, practical, and time-tested method for planning, executing out, and conveying the results of work. The said phases are as follows: selecting, planning, executing, reporting, and follow-up. Personally, I believe that all of the phases are extremely significant and crucial to the success of the company's achievement of goals. But if I were to choose as to which are the two most fundamental of them all then I would have to say planning and executing. Planning is very critical in auditing due to the fact that it covers drafting, financing, defining the target demographic, testing methods, and publicizing the audit. Poor planning results in inefficient auditing practices because testing activities that can be combined or strategized are instead conducted separately; the selection and review of transactions are done in more steps; and rework is prevalent since procedures are often started incorrectly, only to be reconfigured and more data evaluated later. I think that planning is the most fundamental phase among all the phases as it is the basis on how to properly go about the whole situations that will be encountered in the business. Secondly, I think that executing is vital as well because this part is when auditors conduct the steps identified in the planning process. The steps on this phase often include conducting surveys and interviews, reviewing rules, policies, guidelines, and best practice, verifying sample transactions, and examining and analyzing data sets (University of Oregon, n.d.). The fieldwork phase will determine if the program they planned to conduct is running smoothly and effectively to attain the related goals and objectives. We will also be able to obtain verification of proper establishment of the controls which were designed by the management.
ReplyDelete2.
There are several companies that comes to my mind as to where I would like to exercise and practice operational auditing. But one company that I immediately thought of is one of the biggest telecommunications, internet, and digital service holdings company in the Philippines, PLDT. We live in a digital era where technology continuously fosters and grows in our community. Especially now when almost all of us rely on the internet to go on with our daily lives, the internet companies are experiencing immense pressure from everyone. As such, I would like to oversee and manage the operational auditing of the said company. I am one of millions of customers of PLDT and I first handedly experienced their failure in certain areas. They lack the capacity and capability to provide all of its clients a fast internet connection for which they assured on their promotions and advertisements. If I were given a chance to audit for the company then I would as I would surely do my best to improve their services.
3.
To ensure that the audit is effective, I would contemplate on the best audit plans to be able to serve and provide our customers high-quality internet service. I would also conduct risk assessments and identify administrative support to learn more about the scope of the business. The risks that I would be able to identify would surely give us a heads up of what we are about to encounter if ever there will be inevitable circumstances in the future. I would also analyze each step of the process in order to enhance customer satisfaction and lessen complaints.
References:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
University of Oregon. (n.d.). Audit Process. https://internalaudit.uoregon.edu/report/audit-process
PATRICIA DENISE P. LEYCO (2019-101438)
This comment has been removed by the author.
ReplyDelete1. All phases of operational audit are important since each phase has the purpose of effectively executing the audit process, and the phases cannot be completed without the other phases. According to Mark Grabillo, there are five operational auditing phases: selection, planning, execution, reporting, and follow-up. For the selection phase, the internal audit creates an audit plan for the following year based on the results of the assessment from the current year and the resources of the firm’s department. During the planning phase, the internal audit will gather information about the firm's operations in order to establish the audit's objectives and scope, as well as the risks, the scheduling of fieldwork, and the audit's reporting. During the execution phase, the plan will be carried out and fieldwork will commence. Along with it, the firm will be kept up to date on the auditing process through regular meetings that will include a discussion of audit observations, significant findings, and recommendations for improvements. During the reporting phase, the firm will get a draft report with a summary of the audit findings, conclusions, and recommendations. Once the report has been communicated to the firm, the firm should respond to the report and submit an action plan. For the final phase of operational auditing which is follow-up, internal audit follows up on all audit findings within one year of when the report's issuance (Grabillo, 2021). As a result, no step should be taken for granted while conducting an operational audit because each has a function to play and must be completed in order to fully assess the audit.
ReplyDelete2. If I would be an operational auditor for a certain company, I would like to audit the Philippine Long Distance Telephone Company (PLDT), the country's largest and only integrated telecom company. PLDT provides a diverse variety of telecommunications and digital services via the Philippines' most extensive fiber optic backbone, as well as fixed line and cellular networks (PLDT, 2017). The reason why I would like to audit this company is because there have been several complaints regarding its operations and how they provide services. I would like to identify those problems and issues about their business operations that their customers are complaining. Then, when the problems have been identified, a proper reporting will take place and the findings will be communicated to the company. The report will include corrective action plans and recommendations on how to resolve the problems to be able for the company to operate its services effectively and efficiently.
3. To ensure the effectiveness of the audit on the company’s operation, an auditor should provide an operational checklist of procedures. Based on Go Cardless, the checklist include: Choose qualified auditors, screen audit clients, define audit plans and processes, define scope and objectives, reference documents, identify administrative and infrastructural assistance, gather information, audit evidence, compare to the criterion, audit the findings, evaluate the findings, report findings and actionable insights should be presented, follow-up to address any queries and concerns, and Follow-up audit (Go Cardless, n.d.)
References:
Gocardless. (n.d.). What is an Operational Audit? Accessed October 4, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
PLDT (2017). Company Profile. http://www.pldt.com/about-us
-Angelika D. Francia (2019-101440)
Ramos, Crishia Ellaine P.
ReplyDeleteCBET-01-501A
As discussed in the previous Discussion Assignment in our Week 2, there are five phases in auditing and these are the Selection, Planning, Execution, Reporting, and Follow-Up. Each phases plays a vital role in auditing, they are all important and essential in performing audit. Based on my own perspective, the two phases that I think were very important and should never be taken for granted are the Planning Phase and the Reporting Phase. Each audit requires planning, starting from defining the scope and objective to developing audit steps to meet the objective. Internal audit conducts an entrance meeting with management to discuss the purpose of the audit, risk factors, and other logistics. Management is included in the planning phase and the details are documented in a planning and scoping memo. (Office of Internal Audit, n.d.) Planning phase is crucial because it will serve as the foundation ground in auditing and will help to start in identifying and meeting the goals and objective of company. Poor planning could lead to the ineffective and inefficient work and output. In conclusion, this proves that planning phase is one of the important phases in auditing. In addition, I also recognize the reporting phase as very important and should never be taken for granted because it is where auditors conduct an exit meeting with management at the conclusion of the fieldwork to discuss the results of the audit, specific findings and recommendations and other observations. It contains the summarization of the audit findings, conclusions and recommendations that are relevant in auditing itself made in a draft report which communicated through the clients. Clients have the opportunity to respond to the report and submit an action plan and time frame. These responses become part of the final report which is distributed to the appropriate level of administration. (Grabillo, 2021)
If I were given a chance to audit in one of the companies in the Philippines, I will choose the San Miguel Corporation, we all know that this company is one of the biggest and well-known in the market industries, they are also recognized as one of the wealthiest company in the Philippines, the company plays a vital role in the country, especially when it comes to their taxes, their records and a wide range of employees. Performing the phases in this company may be complex due to its wide range, but I would like to explore and challenge myself to exercise my knowledge and skills when it comes to auditing. I believe through considering all the phases in auditing, I can do my work effectively and efficiently as well.
To ensure that the audit is effective in my chosen company, here are some operational audit checklist of procedures that I may exercise. It is based on my research, the first thing to do is to select and screen auditors, define audit plans and scope, pull together reference documents, identify administrative support, research operational procedures, collect statistical evidence, audit evidence from all sources, evaluate evidence, compile audit findings, share audit conclusions, give actionable advices and follow up with questions and concerns. These are all I think the most essential procedures to consider in auditing to become effective.
References:
Accountants Go Cardless (n.d.). What is an operational audit? Retrieved October
13, 2021 from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Grabillo, M. A. (2021). Operational Audit: What are its Phases?
https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Office of Internal Audit. (n.d.). The Audit Process. Retrieved October 12, 2021, from https://internalaudit.uoregon.edu/report/audit-process
Rillera, Myra Dianne G.
ReplyDeleteCBET-01-501A
All the phases of operational audit are essential in the audit process but if you were to ask me, the very important and should never be taken for granted is the planning phase and fieldwork. The planning phase involves assessment of risk, designation of resources and timeline, collection of relevant data that will serve as the basis for determination of the scope, and preparation of audit plan. This phase is the starting point where internal auditors organized the audit process. Fieldwork is the action to be done related to the testing of the existing process or program of the organization or collection of pieces of evidence through interviews, documentation, observation, and recalculation of the activities. This phase allows the internal auditors to verify if the business activities are related to achieving the objectives and goals with the use of evidences. These two phases are essential as it serve as foundation for the last two phases which are reporting and feedback.
The company that I would like to audit is the Manila Electric Company also known as MERALCO. It is an Electric Power Distribution company. It is the private sector electric distribution utility company in the Philippines covering 36 cities and 75 municipalities and franchise area of over 9,685 km2 includes the country industrial, commercial and population centers. I want to make sure that the company’s operational objectives are being followed which are data and information published either internally or externally is accurate, reliable, and timely; The actions of directors, officers, and employees are in compliance with the organization’s policies, standards, plans and procedures, and all relevant laws and regulations; The organization’s resources are adequately protected against loss, fraud, misuse, and damage; Resources are acquired economically and employed profitably; quality business processes and continuous improvement are emphasized; and The organization’s plans, programs, goals, and objectives are achieved.
The first step in the operational audit checklist procedure that will be employ is to arrange an audit, after which will be notify management of the upcoming audit so that they have enough time to gather the essential and accurate information that will be needed before beginning the initial audit plan. Second, create an audit strategy in which it will describe the project's scope, analyze the organization's audit history, and review any past issues that may have been discovered, as well as assess the risks. After that, do the audit, which will include gathering evidence, reviewing all records, evaluating the success of particular functions, finding system faults, having conversations with personnel, and any other evidence-gathering approach that may be appropriate. After the audit has been completely done, review the audit's findings with management, including any faults that were discovered and what methods may be taken to improve those areas. Finally, check with management to see if the corrective steps are being implemented. It is to determine whether corrective actions have been performed and what consequences they have on the organization's operational activities.
REFERENCES:
Auditing: Objectives & phases of operational audits ... (n.d.). Retrieved October 12, 2021, from https://www.youtube.com/watch?v=7aUabD77FvI.
Internal controls and Audit. Meralco. (n.d.). Retrieved October 12, 2021, from https://company.meralco.com.ph/corporate-governance/internal-controls-and-audit.
Keen, R. (2021, February 9). Internal Audit Checklist - Everything You Need To Know. ISO 9001 Checklist. Retrieved October 13, 2021, from https://www.iso-9001-checklist.co.uk/internal-audit-checklist.htm.
Manila Electric Company. Value.Today. (n.d.). Retrieved October 12, 2021, from https://www.value.today/company/manila-electric-company.
Internal audit conducts assurance audits through phase processes which are planning, conducting fieldwork, reporting results, and following up on corrective action plans. Out of all phases of Operational Audits, I believe planning and fieldwork are the most important phases and should never be taken for granted. According to Benjamin Franklin "Fail to plan is planning to fail" which only shows how fundamental this phase is for us to have a victorious or successful audit. We cannot begin with the auditing process without a clear and visible path to take. Planning is very essential in any way because it assists in the coordination of work done by experts. It facilitates the direction and supervision of engagement team members and the review of their work. It helps the auditors to identify and resolve potential problems on a timely basis. It helps the auditor to devote appropriate attention to important areas of the audit. It assists in the selection of engagement team members with appropriate levels of capabilities and competence (Frank Mwansa, 2020). To conclude, there would be a higher probability of failure if we did not invest our time in making a concrete plan. The second most important phase is Fieldwork which includes interviewing, documenting, applying testing methodologies, managing fieldwork, and providing status updates. It consists primarily of two things
ReplyDelete(1) Determining if the process or program under review is designed effectively so that the related goals and objectives are likely to be achieved
and (2) Verify that the controls in place are performing as designed by management (Murdock 2017). In this phase we will be able to verify whether the operation under review (based on planning phase) is likely to achieve its objective. Furthermore, the fieldwork involves, identifying and analysing the key risks within the process or system, confirming the process and any controls in place to mitigate these risks, evaluating the extent to which the controls in place do mitigate these risks, and testing the controls to confirm they are operating as intended. For a different instance, We all know that operational audit is applicable to all businesses and can be a major advantage to some of them. If I were to choose a company in the Philippines to audit, I would choose Meralco because they are the largest power distributor in our country and any single failure in operation will greatly affect almost all the households in the Philippines. Expert operational auditors must take place to mitigate risk and to avoid power interruption. Internal control is an integral part of MERALCO’s governance system and risk management. For them to ensure the effectiveness of their operational audit, they must
(✓) Identify and evaluate the exposures to loss which relate to their particular sphere of operations. (✓) Specify and establish policies, plans, operating standards, procedures, systems, and other disciplines to be used to minimize, mitigate, and/or limit the risks associated with the exposures identified. (✓) Establish practical controlling processes that require and encourage officers and employees to carry out their duties and responsibilities in a manner that achieves the control objectives of the Organization. (✓) Maintain the effectiveness of the controlling processes that have been established and foster continuous improvement to these processes.
References:
Hernan, M. (2017). Operational Auditing. CRC Press.
Frank, M. (2020). Can you explain the importance of audit planning? https://specialties.bayt.com/en/specialties/q/429627/can-your-explain-the-importance-of-audit-planning/
Office of internal audit (2021). Audit Process. https://internalaudit.uoregon.edu/report/audit-process
Meralco. (2017). Internal Controls and Audit. https://company.meralco.com.ph/corporate-governance/internal-controls-and-audit
1.)
ReplyDeleteAlthough all parts of an operational audit are vital in examining a company's operations, if I had to pick one, I'd go with the planning and reporting phase. Operational Audit professionals obtain necessary background information and establish contact with the client during the planning phase of each project. The audit should be well-planned by the auditor. The auditor's obligations for properly planning the audit are outlined in this standard. Establishing the overall audit strategy for the engagement and preparing an audit plan, which includes, in particular, planned risk assessment techniques and planned responses to substantial misstatement risks, are all part of the audit planning process. Planning is not a distinct step of an audit; rather, it is a continuous and iterative process that can begin soon after (or in conjunction with) the conclusion of the prior audit and last until the current audit is completed. The kind and scope of planning activities required during this phase are determined by the company's size and complexity, the auditor's past experience with the organization that changes in no particular circumstances.
The reporting step comes next. Here's where the auditor comes in. A draft report is used to provide to the customer a summary of the audit findings, conclusions, and specific suggestions. Clients have the option of responding to the report and submitting an action plan with a deadline. These responses are included in the final report, which is sent to the appropriate level of management. This written report provides a review of the specific audited area as well as positive and negative audit observations. Any audit findings, as well as recommendations to management and management's action plan, are included in the report.
2.)
I'd choose Nestle Philippines as the company to audit if I had to. Nestle Philippines, as we all know, is one of the top companies in the Philippines, and it is the country's largest food and beverage company that has been around for over a century. In addition, I'd like to be a part of it to contribute value, insight, and operational efficiencies because this is my dream company and it serves as a source of motivation for me to pursue my goals. Given that they are a major organization, this may serve as a springboard for me to advance very far and very quickly in business. They can provide me with a solid foundation in auditing that will prepare me for a future as I learn to understand firms and think commercially.
3.) I'm going to go over the following operational audit checklist ith Nestle Philippines to achieve an efficient and successful audit outcome: Selecting and screening auditors, defining audit plans and scope, gathering reference documents, identifying administrative support, researching operational procedures, collecting statistical evidence, audit evidence from all sources, evaluating evidence, compiling audit findings, sharing audit conclusions, giving actionable advice, and following up on questions and concerns.
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 13, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
KU Internal Audits. The Audit Process. Accessed October 13, 2021.
https://internalaudit.ku.edu/project-process
PCAOB (2010). AS 2101: Audit Planning. Accessed October 13, 2021. https://pcaobus.org/oversight/standards/auditing-standards/details/AS2101
- COLINE B. BERTIZ (2019-100749)
Mangilog, Anthony C. 501A / 2019-104415
ReplyDelete1. Every phase of an operational audit is essential since it will provide a company’s simple, effective, and efficient report performance. Also, conducting these phases will ensure that the audit report will be free from bias and done with honesty. The first phase is the most important out of all phases, which is the planning phase. The planning phase will be the foundation of the auditing; it will provide the goal and objectives of the organization. It included budgeting, scoping, defining the population of interest, and announcing the audit. In this phase, the internal auditor will assess the risks identified by the management to prepare an audit plan regarding the identified risks. Identifying the risks will play a vital role in what will be the results of the planning phase. Different risks may affect the plan that needs to be addressed within the organization and the unforeseen risks that may occur. As stated in the book of Hernan Murdock, “failing to plan is planning to fail.” With this proverb, not planning efficiently and undermining possible risks will lead to failure.
The next important phase is the execution phase or also known as fieldwork. After coming up with a plan, it is time to execute it in the field. During fieldwork, the internal auditor staff must review the data and information given to them to report it to the clients. Doing so will analyze the report and hold a meeting with clients to communicate the analysis. In this phase, planning may also occur even though it is already in the execution phase. The reason is that internal auditors might discover or identify risks that have not been discussed. Maybe some risks are considered low is a more significant risk. So even in the execution phase, the internal auditor should evaluate the situation to develop a better idea because not everything planned will go in a way they want. Internal auditors will do their best to minimize the risks and come up with a better solution to attain the goal and objectives of the organization.
2. Water is one of the essential needs of an individual. An individual can only survive a few days without water. Here in the Philippines, the water crisis is prevalent. The drainage system is full of garbage from the unsettled settler living beside it, water shortage due to natural phenomena like El Niño. In addition, the poor quality of pipes is caused by poor quality materials that result in frequently broken pipes. That is why the company that I want to audit in the Philippines is Maynilad, one of the water services providers. I want to audit Maynilad to enlighten myself on how they solve those risks on water management here in the Philippines. Also, I want to know how they maximize their resources to provide an excellent service to their customers, even though the water drainage system in the Philippines is not that good.
3. To ensure audit effectiveness in the Maynilad company checklist should be made to reduce human errors while conducting the auditing. The checklist may contain the following: provide basic details, establish the objectives, determine the risks and opportunities, prepared all the documents that are needed, define the scope, assign tasks, gather the results and information, and compile it. Then, analyze the data and information, report it to the administration, give some recommendations. Those are some of the procedures that are needed to ensure that audit is effective.
Mangilog, Anthony C. 501A / 2019-104415
ReplyDeleteReferences:
Courtnell, J. (2020, February 5). Operational Audit: Best Practices Used by the Experts | Process Street | Checklist, Workflow and SOP Software. Process Street. https://www.process.st/operational-audit/
Grabillo, M. A. (2021, October 2). OPERATIONAL AUDIT: WHAT ARE ITS PHASES? markgrabillo.blogspot https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Murdock, H. (2021). Objectives and Phases of Operational Audits. In Operational auditing: Principles andtechniques for a changing world (pp. 36–41). essay, CRC Press.
Tolentino, A. S., Jr. (2020, September 25). Health crisis and the looming water crisis. The Manila Times. https://www.manilatimes.net/2020/09/26/opinion/columnists/health-crisis-and-the-looming-water-crisis/772130
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ReplyDeleteThe International Institute of Internal Auditors (IIA) defined internal audit as an independent and objective activity which gives assurance to improve operations and contribute an additional value to the organization. Based on Murdock (2017), there are four significant phases in the process of internal auditing. It includes planning, fieldwork, reporting, and follow-up. These phases are indeed important that if neglected will cause tremendous financial crisis and imminent regulatory breaches (Courtnell, 2020).
Auditing process is different and unique to every organization or any auditing firms but most of such follow broad phases including planning, fieldwork, reporting, and follow-up. These fundamental phases form part of the improvement and additional value of an organization which give emphasis on the idea that every step is indeed as important as the other. One phase cannot be fulfilled without the help of another phase which means every phase contributes to the succession of the other phases. With that being said, in my own opinion, every phase is important although planning and fieldwork is the core contributor of the succession of the internal audit process. Moreover, the planning phase of internal audit is not a simple process though often overlooked by some companies because according to Gertland (2017) in his article about the importance of audit planning they emphasize that it involves a lot of consideration of the client’s industry and varying external factors. Hence, planning is the most crucial part in the process of internal auditing due to its nature of being the first step whereby the other steps would follow to attain the objective of the audit. In addition, the planning phase also needs to be as concrete as possible because it serves as the foundation of the whole internal audit process which will then be the basis of the succeeding phases (Gertland, 2017). Furthermore, fieldwork as well is one of the most significant and vital phases aside from planning due to its very nature wherein every plan that the previous phase establishes will be now put to a test. This phase according to Murdock (2017) will be the process of execution of the determination of the effectiveness and efficiency of the system or program implemented as well as how these systems or programs are performing. Thus, these two phases are truly the most important phases of the internal auditing but it does not mean the others are not as significant as these. Hence, internal auditing will not be successful without the need of the auditors to report and follow-up the results that planning and fieldwork has concluded.
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ReplyDeleteAuditing phases will really be tested if it were used in an actual scenario. One of the most successful and well-known companies in the Philippines is the SM Investment Corporation. It is a pleasure really to have an opportunity to scrutinize this company not only for their financial greatness but also how their policies and systems work toward their attainment of their goals and objectives. As a student who just started to learn about the phases of internal auditing, I will definitely follow the four fundamental phases of internal auditing namely planning, fieldwork, reporting, and follow-up. To have an effective planning phase, the plan should have the objective of define the company or client, establish a well-rooted study of the client performance not only on the present but including its past performances, verify and assess the risks which the client might face in the present and in the future, make use of realistic timeline and resources, create the audit plan, and review and revise the plan. Secondly, the fieldwork should be the process of executing and testing the plan established by the previous step. This should include collection of evidence, documentation of the programs implemented, application of methodologies, management of the current work, and report status update of the fieldwork. In continuation, after planning and fieldwork, reporting will then be the next phase which should include reporting summary of the internal audit report. Summary that defines the processes that are working on the client’s organization and how it could be improved or how it could add more value to the organization and the processes that need to be removed and modified due to its inefficiency in contributing to the organization’s objectives. And lastly, the follow-up phase where it includes the status of the implemented processes or systems in the client’s organization and how it does affect the continuous growth of the organization.
To sum up, in the achievement of the goals and objectives of the organization, the fundamental internal auditing phases should be followed. Every single phase contributes to the relative success of the audit. Thus, the auditing process is truly an important procedure that most of the company should consider for their goals and objectives to be met.
References
Courtnell, J. (2020, February 12). Process.st. Retrieved October 9, 2021, from https://www.process.st/audit-process/
Daniel J. Gartlan, C. (2017, September 1). Journal of Accountancy. Retrieved October 2020, from https://www.journalofaccountancy.com/issues/2017/sep/importance-of-audit-planning.html
Murdock, H. (2017). Operational Auditing. Florida: CRC Press.
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteAll of them are important and need to be followed to ensure the satisfaction of the client. These are the 4 phases that are important to ensure the progress of a business. For me, you can still compress it into a 2-3 phase by following this step. You can remove the planning phase if you will be doing a trial and error to know the needed adjustment. If you have done the fieldwork the best you can and the managers follow your recommendation you do not need to do a follow-up because it is guaranteed to have significant improvement.
Planning is important to have a visual of the end goal, but not all plans will lead to success especially if the plan is not flexible or the methods to achieve the goals are dependent on some variables. If this happens, you need to change the plan but not the goal. Most of these changes or adjustments happen in the next phase. Because of this possible adjustment, the planning stage can be omitted but you will be doing it on a trial and error basis.
Fieldwork, this is where the application of the plan happens, gathering of the necessary data, providing status updates, strength, weaknesses, and others. Most of the adjustments of the plan occur here because the plan is only visual or is created in the mind some of these thoughts are unappropriated or cannot be applied in real life and to the real things that happen. The evaluation of this data or result will be given to the next phase. Just sure that the adjustment will result in more. Don’t move to the reporting phase unless there is significant progress that occurs.
Reporting is where the communicating of the result to the management or higher-ups happens. After presenting the suggestion or recommendation they have the choice of following it or not. To ensure that your recommendation help for the improvement of the company you must do the last phase.
The follow-up is made to ensure that the management follows the suggestion and ensures the progress made. This can be omitted because in the execution the adjustment is already tested and is ensure progress.
ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
Though it is not a company I will choose MESO (Mandaluyong Educational Scholarship Office). There are a lot of things that need changes so the management are will be effective. As a scholar we are experiencing some delay in our allowance and others are still complying with the requirements but they do know that they are not qualified. MESO is one of the offices in Mandaluyong that is under the government’s control.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective
According to GoCardless, the below are the operational audit checklist that needs to be considered before doing the audit and giving the recommendation
1. Define audit plans and scope. My goal is to reduce the waiting time for the allowance and make sure that they reach their goal of giving the allowance every month.
2. Identify administrative support. Since this scholarship program is used to help students in aiding the school expenses. The ones managing the MESO will be at my side for this
3. Research operational procedures. during face-to-face classes, we have experience 3-4 mons of delays. but this is reduced to 2 mons when we had online classes.
4. Share audit conclusions. As an officer, we are still using google form or online for the documentation of the old and new scholars.
5. Follow up with questions and concerns. the downfall of this is, it is difficult to guide the new scholar using online and not all scholars are blessed with the internet and electronic devices.
REFERENCE:
What is an operational audit? (n.d.). Retrieved October 12, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/.
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ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
The phases provided in operational auditing perform individually with their equal participation and importance in auditing. Every part has its significant influence in the firm's final output and performance. But if I were to ask which for me is the two most important phases that should never be taken for granted is planning the scope in audit and the reporting phases.
In the planning phase, the auditor makes an effort to know what target documentation is needed in the firm. As we all know, starting and taking the first step is always the hardest part in dealing with any activity. A person should have a background, experience, and knowledge about the job that he/she will be dealing with. Auditors use some efforts to determine the objectives of the said plan. They also may use the previous documents to help them decide what could be the best plan they can execute. Murdock mentioned in his book, Operational Auditing: Principles and Techniques for a Changing World the proverb “Failing to plan is planning to fail.” Poor planning may result in inefficiency that may affect the overall performance of the business that is why proper planning and utilization of auditors should be careful.
The second important phase for me is the reporting of the audit after doing the first two phases. Here we can see the written reports that include the discussion of specific audits in the fieldwork, both the positive and negative feedbacks. Any findings that gathered from the execution of the plans are noted in a detailed manner. From those, the auditor can point out what area should need improvements and suggests some recommendations to solve the problems. This phase will also be the basis for making rational decisions on what standards may be the best to use.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
According to the latest surveys conducted by different bodies of researchers, among the Philippine top companies in the Philippines are the SM Investments Corporation, Ayala Corporation, BDO Unibank, BPI, Globe Telecom, and other companies. These mentioned firms are the best among their services and products offered to the market in spite of suffering some problems due to the world wide pandemic or the Covid19 virus across the world. In this time of crisis, people are prohibited to go outside to prevent the spread of the virus. Many businesses have closed due to bankruptcy, malls were forced to close, workers have opted to work from home and some lose their jobs, and universities and schools are also forced to close. The transition pace between working and studying face-to-face classes to online working and learning is so fast that some couldn't keep up with the changes. Among the Philippine top companies from the latest surveys is the PLDT- the Philippines’ largest fully integrated telco company. PLDT is one of those companies that provides internet connection not just in the Philippines but also worldwide that helps the people to communicate, participate in online activities, and many more. As we can see, people highly depend on using the internet today because aside from the restrictions and guidelines for the pandemic, using the internet with our mobile gadgets is the only way to communicate to the world.
If I were to choose what company I would like to audit, I would choose the PLDT company because as I mentioned that we are highly dependent on the service they provide, I want to know their operations and what causes the problem whenever there is an internet disruption. By proper planning and conducting tests in the fieldwork, as an operational Auditor of the firm, I would like to cite and point out the glitches that may happen in the future and to avoid it from happening.
Erica C. Bandola (2019-105307)
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
ReplyDeleteThe primary purpose of the said committee is to assist the company's board whether it performs the basic standards and procedures, including alos those details that need careful verification and analysis, in fulfilling its responsibilities. The number one purpose of the audit committee is to keep in track its financial reporting and principles, policies, internal control, and other accounting related works. To properly follow the operational audit, a checklist of procedures should be followed to ensure the efficient and effective functioning.
(a) Review and approve the audit plan. Always make sure that the company follows the objectives. The review includes the inspection of the audit scope, resources, and budget necessary for the implementation.
(b) Ensure that internal audit practices adequacy and effectiveness of entity's control over financial reporting, governance, operations, etc..
(c) Require auditors to render annual reports on the internal activities, responsibilities, and performance. This should cover the risk and exposure, control issues, and others that concerns it.
(d) With regards to the internal auditor, the board must appoint a person in charge and will functionally report directly to the committee. He is expected to report the summaries appropriate and significant to the committee.
Reference:
Company Leadership. PLDT. http://www.pldt.com/about-us/company-leadership
Henderson, K. Tax Audit Procedures. Small Businesses Chron. https://smallbusiness.chron.com/tax-audit-procedures-4227.html
Erica C. Bandola (2019-105307)
For this week’s lesson, it is all about the auditing principles, challenges and phases of operational audit. I have learned a lot in this week through reading handouts and videos that our professor provides. "A fundamental key to audit success is the reputation for objectivity. That implies independence from activities reviewed. Complete independence is an unattainable goal while practical independence is not only possible but absolutely essential." - Larry Sawyer
ReplyDeleteThis week, my takes in operational audit is that auditors are the one who sphere head the operational activities if it qualifies to the organization’s standard on effectivity and efficiency. They are also the one who always keep in mind the objectives and policies of the organization that keep them in track. They aim to optimize efficiency by auditing business’s internal policies and procedures. They can easily identify risk and troubles. The auditing principles are as follows: Integrity, fair representation, due professional care, confidential, independence and evidence-based approach. Some of the auditing challenges are it is costly and required a lot of time, unexpected problems that takes time repair and new employees.
My learnings in the phase of auditing. This process is developed by the auditor itself to serves as their guide in doing an audit. This phase contributes to the success of the whole business or organization. In the reference that I had red, there are five phases of operational audit, they are selection phase, planning phase, execution phase, reporting phase and follow-up phase. In selection phase, auditor conduct a risk assessment and come up an audit plan. In planning phase, this will be the time for the auditor to plan and gather relevant background information to their client. Through this, auditors can identify the risk and the objectives and scope of their client. In execution phase, it is the time to execute the audit plan as for the previous phase. Reporting phase is summarizing the findings, recommendation and conclusion, also the feedback of the organization. Last is the follow-up phase where auditor follows up to their audit plan a year ago. For me the important phases are the selection phase, planning phase and follow-up phase. It is important to me to conduct a selection phase is because it is where it al started, the start is the most important in all, you cannot achieve any if you don’t start, it is important for me to have selection phase because in this phase the risk assessment occurs and it is important to assess risk to identify if it is significant to the organization that needs an immediate respond. Selection and planning phase are related to each other, in planning phase, you develop a plan to resolve the risk that you found in the selection phase, in that way planning is important for me, because a good planning will result to a better outcome. Follow-up phase is important to do because its like reviewing if the execution is successful or needs an improvement.
-Villanueva, Don Luis M. (2019-102313)
2. We all know that for today’s situation, it is important to switch in to a more environment friendly packages and practices in general. We are all aware of the backsplash if we don’t take care of our mother nature but as of September 22, 2017; Nestle, Uniliver and P&G are the biggest company to contribute plastic pollution in the country. As an aspiring auditor I want to audit and take an action for these companies who violates the nature and also not being responsible enough to the environment. It is important to lessen the plastic in take for those business so that we don’t see plastics in the oceans anymore. For the operational audit checklist of procedures, here are my take. First is to define audit plan and scope, gather all important data and audit all the evidence, execute the plan, have the result for the findings, conclusion and recommendation, and follow-up after a year.
ReplyDelete"Plato says that the punishment which the wise suffer who refuse to take part in the government, is, to live under the government of worse men; and the like regret is suggested to all the auditors, as the penalty of abstaining to speak, that they shall hear worse orators than themselves." ~ Ralph Waldo Emerson
Reference:
Grabillo M. A (2021). OPERATIONAL AUDIT: WHAT ARE ITS PHASES?. Markgrabillo.blogspot.com. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html?m=1
Greenpeace Philippines. (2017). Nestlé, Unilever, P&G among worst offenders for plastic pollution in Philippines in beach audit - Greenpeace Philippines. https://www.greenpeace.org/philippines/press/1110/nestle-unilever-pg-among-worst-offenders-for-plastic-pollution-in-philippines-in-beach-audit/
Gocardless.com. (2021). What Is an Operational Audit?.
-Don Luis M. Villanueva (2019-102313)
Nombrado, Sean Lester / 2019-106902
ReplyDelete(1)In my opinion, the first and third phases, which are planning and reporting, are critical and should never be taken for granted since the goal is to engage an initial step to set it on the exact path for success. Scoping, funding, identifying the demographic of interest, testing, and publicizing the audit are all part of the planning process. The most crucial aspect of an audit is planning. Poor planning leads to inefficient auditing practices, as testing activities that can be combined or strategized are instead done one at a time. Selecting and reviewing transactions together is instead done in multiple steps, and rework is typical as procedures are poorly initiated only to be rearranged, and additional information examined later. Finally, meeting scheduling with process owners and other stakeholders suffers as a result of this.
Furthermore, Murdock (2016) states that the third phase of the audit is the communication of findings, also known as reporting. It entails communicating the review's findings, observations, and best practices and developing recommendations for corrective action. It provides a mechanism for gathering the characteristics of the deficiency so that the basis for the compliance and key facts are available when the matter is discussed with management.
(2)If given an opportunity to audit a company, it would have to be P&G since they identify and address social and environmental sustainability issues at external business partners. P&G strives to be socially responsible in the use of company resources for the long-term benefit of society. P&G will identify and notify external business partners required to use and submit the scorecard or designated equivalent online tool to track the improvement on environmental sustainability metrics. Additionally, they operate their business with integrity and in complete accordance with the law, refusing to accept anything valuable that affects the behavior of another business partner or government official to get an advantage (Procter and Gamble, 2021).
(3)The operational audit objective is to improve business operations by analyzing administrative and operational aspects to make the appropriate modification. It also supports the processes and identifies shortcomings in systems for subsequent correction to reduce the cost and transform an activity into a profitable strategy. Operational auditing will be effective if the procedures of a checklist are provided. (Eby,2017) states that establishing objectives and the audit program, implementing the audit program, monitoring and reviewing, and improving it to see if it will be effective and efficient in the future. This type of procedure checklist is what I'm going to use for the company that I chose.
Nombrado, Sean Lester / 2019-106902
ReplyDeleteEstablishing objectives and the audit program is one of the main goals and priorities in operational auditing. It considers the style of products, projects, processes, and any changes to them, and the responsibilities for their competence. It considers management system requirements, contractual and legal needs, and determining potential threats to avoid fraudulent acts. It assesses suppliers as well as the requirements and expectations of all parties involved, including customers. Consider the auditee's degree of performance, hazards, past audit findings, and the maturity of the management system under examination. Moreover, it outlined the objectives, scope, and criteria and selected the auditor to fulfill the responsibilities and focus on the project's outcome. Assess compliance with the program, schedule, and objectives, and then assess the auditors by implementing methods. They evaluate feedback from all interested parties. Several factors may determine the need to change the program, including audit findings, the demonstrated level of effectiveness of the management system, and changes to the management system, standards, and other requirements of the audited entity. Lastly, it is significant to evaluate if objectives have met the requirements. Providing an assessment for the improvement of the project and reviewing if it should take into the accounts and trends, conformity with approaches, the evolving needs and expectations of interested parties, providing possible methods for the operational auditing, the effectiveness of the measures to address associated risks, and auditing program's security policies regarding the information of their clients.
References:
Courtnell, J. (2020, February 5). Operational Audit: Best Practices Used by the Experts | Process Street | Checklist, Workflow, and SOP Software. Process Street. https://www.process.st/operational-audit/
Eby, K. (2017, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
Murdock, H. (2016). Operational Auditing: Principles and Techniques for a Changing World (Internal Audit and IT Audit) (1st ed.). Auerbach Publications.
Procter and Gamble (2021, October 12). Anti-Bribery / Anti-Corruption(ABAC). Https://Pgsupplier.Com/Guidelines/Pg-Guidelines-for-Suppliers#anti-Bribery. https://pgsupplier.com/guidelines/pg-guidelines-for-suppliers#anti-bribery
What Companies in PH Need to Know About the Audit Season. (2021, September 6). CloudCfo. https://cloudcfo.ph/blog/accounting/audit-season-coming-companies-philippines-need-know/
Chapter 2 provided relevant information for deeper apprehension of operational auditing. By browsing this, I had the chance to be familiar with the phases of audit, and the things to do under each phase. There are four major phases in auditing which include Audit Planning, Audit Execution, Audit Report, and Audit Follow-up.
ReplyDeleteBy understanding each phase, auditors will be able to recognize its importance which can affect their work efficiency. From my perspective, the two most valuable phases are the Audit Planning and Audit Execution phase. Planning involves setting up actions beforehand to organize strategies to achieve the goals of the organization. By creating a concrete plan, enterprises will not lose track even though unexpected events occur. As a matter of fact, having as many plans as possible is recommended to be prepared for the risks that might encounter. Moreover, Audit Execution should not also be taken for granted because this is the phase where collecting relevant information happens. Auditors should do a great job because the result of the audit will depend on the data gathered under this phase. Hence, if the inputs are insufficient, then it would affect the decision-making of owners as well as the stability of the organization itself.
There are multiple types of business in the Philippines and all of them have different focuses on operational audit depending on their classification. The operational audit of a corporate-type business is different from that of a partnership because their operations are distinct from one another since corporations are more strict and highly regulated. Thus, if I will be given a chance to conduct an audit of a company, I would choose Jollibee Foods Corporation (JFC).
Jollibee is a Philippines-based company and is a leading fast-food chain in the country. They helped a lot of Filipinos, especially during this time of pandemic. According to Rappler.com, JFC donated 220 million worth of products to help frontliners and the community. They also released an emergency fund to give advance payments and 13th-month pay to their employees to provide for the necessities. This is the driving factor why I chose JFC company because I have recognized that they are not just achieving their main objective– maximize the profit, but also they are valuing the Filipino people.
Consequently, By conducting an audit to JFC, I would become aware of their processes and may help them to increase productivity so that they could give more aid to Filipinos who are in need.
To ensure the effectiveness of the audit. Here are the checklist procedures for the conduct of the audit:
a.) Hire competent auditors, interview them to be aware of their strengths and weaknesses.
b.) Communicate the organization's goals and let them understand the objectives to be achieved.
c.) Provide practices and procedures to avoid unnecessary actions. It is also good to allow the team to speak up and give suggestions.
d.) Gather information and give each member a designated scope of work.
e.) Compromise and communicate while conducting the audit. Ask for help if needed.
f.) Brainstorm to come up with a good audit.
h.) Make an assessment based on the information and create better procedures to increase the efficiency and productivity of operations.
g.) Review the findings and the assessments by conducting a meeting with the team before disclosing the information.
h.) Report the audit to concerned people.
References:
• Rappler (2020). LIST: Aid from Philippine companies during coronavirus pandemic. Accessed October 10, 2020. https://www.rappler.com/business/aid-philippine-companies-coronavirus-pandemic
• Reuters (n.d.). Jollibee Foods Corporation. Accessed October 11, 2021. https://www.reuters.com/companies/JFC.PS
• Accountants Go Cardless (n.d.). What is an operational audit?. Accessed October 11, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
• Business Jargons (n.d.). Planning. Accessed October 11, 2021. https://businessjargons.com/planning.html
- Griarte, Lovely Rose B. (2019-105060)
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ReplyDeleteSince we already know the definition of operational audit in the past discussion of us. Let us dig deep into how the process of an operational audit works. At this module, there are phases that may help internal auditors on how they will create an accurate audit. An operational audit is comprehensive as according to Qvalon, a blog site about auditing. The reason why it is a comprehensive one because it is focused with potential changes to your company operations rather than your errors and accomplishments. It will help the management to function well and to have a better decision making. There are five phases in Operational Audit. As I read and understand each phases of operational audit, the phases I see that are very important and should never be taken for granted are all of the five phases, which are the selection, planning, execution, reporting, and follow-up. All of these are interconnected and each process must be executed correctly because if ever you failed to accomplish something on a selection phase, other processes will be affected. I chose all five phases because each of them has a different role in operational auditing. First is the selection wherein you have to determine what would be the proper risk to take of the management since mostly in this phase focusing on the risk-based approach and when it is already determined, the planning will take place and here will be discussed what should be done such as what is the purpose of the audit and what are the risk factors that will be executed after that. When it is already done, reporting and follow-up will do its thing. All of them should not be taken for granted because it enhances the way the company operates.
The company I would like to audit is the Jollibee Foods Corporation. It is a Filipino multinational company based in Pasig, Philippines. JFC is the owner of the fast food brand Jollibee. The reason why I chose JFC because besides that they are really one of the most popular company here in the Philippines. Their company still runs very well and it still competing among the other food companies. As I searched their financial statements made by SGV & Co., I see that they are performing very well. Aside from that, since they are a big company, it is inevitable that with too many subsidiaries, there is a high possibility that there may be errors in making their accountant's financial statements. Unfortunately, typos or other unintentional mistakes can be just as costly as the intentional ones, so we - the auditors - need to proofread more to make a fairly and relevant financial statements. In that way, the company will be confident that their return of equity is in a good performance.
I will just follow the operational audit checklist procedures made by GoCardless since it is more helpful and accurate to ensure that the audit is effective. Here is a quick operational audit checklist of procedures for better flow: First is to select and screen auditors, since they are the one who will do the job, they should have a quite excellent skills in auditing especially since Jollibee is a big company. Next is define audit plans and scope to help the company decides their decisions and risks to be taken. Then, pull together reference documents and identify the administrative report. With that, research operational procedures will take place, there will be a collection of statistical evidence then audit evidence from all sources. After that, we will be going to evaluate the evidence to complete the audit findings. Share the audit conclusions and last give actionable advice, then follow up with questions and concerns.
ReplyDeleteOffice of Internal Audit. (n.d.). Audit Process | The. Retrieved October 5, 2021, from https://internalaudit.uoregon.edu/report/audit-process
QVALON. (n.d.). QVALON - Mobile workplace for retail chains. Retrieved October 6, 2021, from https://qvalon.com/blog/operational-audit-overview-definition-process-and-purposes/
What Is an Operational Audit? (n.d.). GoCardless. Retrieved October 14, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Out of all the operational audit phases or process, there are two that really stood out for me and should never be taken for granted. First is called the 'Plan the Audit Process. The auditor meets with the appropriate managers to discuss and prepare his or her audit strategy. During this conversation, the auditor learns about the company and any potential issues. They can then identify areas where process changes are needed, giving them tasks to focus on throughout the audit. The auditor also establishes the scope and timeframe of the audit during this conversation. And then after that, they can now begin establishing and finalizing their goals and strategies. This process should ensure that this overall plans help the organization's objectives. The next phase is called 'Report Audit Findings'. In this process, the operational auditor accepts recommendations to broaden his or her ideas. He or she will discuss the findings to the team and listen to their opinions in order for them to improve.
ReplyDeleteThere are a lot of businesses here in the Philippines but more than anything, I would like to audit in an apparel company. I love clothes. I love dressing up. I have always been a fan of fashion. So to be able to know or be part of this business, even if it's just behind the scenes, I would gladly provide my service. Clothing lines always interest me ever since I was young. And I am a firm believer that you will do greater if you love what you are doing. It's a win-win kind of situation. If I remember it correctly, I once said that if I would enter into the business world, I would certainly focus on an apparel industry. Looking back, I did not really think about the depths of it. Since I was just a kid with nothing but a dream, I thought it would be possible.
If I were to audit an apparel company, the first step I would do is to plan the audit process. I would meet up with my team regarding those important matters and discuss to them the plans and strategies I have in my head. I would make sure that the managers and the auditors would meet halfway to reach a specific goals and objectives. The next step is to conduct the audit. The auditor must evaluate the existing processes and procedures to see if they meet the objectives established earlier in the audit. The auditor, together with the managers and employees, should discuss if these processes meet the expectations they set beforehand. After that, reportimg the audit findings should be the next phase. They share these suggestions with the appropriate managers, ensuring that everyone on the management team is aware of the findings and solutions. Management may agree to implement all of the recommendations or may discuss why some adjustments are not feasible.
The last step is to perform a follow-up. The auditor schedules a follow-up meeting with the relevant management team and staff after the audit is completed. During this process, they discuss the changes made to the processes and assess their results.
Dalmacion, Khyla Bernadette S.
CBET 01-501A
2019-105708
The audit is regarded as a critical step in establishing much-needed client and market trust. It aids in establishing the business operations to work efficient and effectively. It ensures that the company is balanced and fair from any kind of risks that can affect company’s operational performance. With regards to this, it is crucial to make sure that auditors are capable of carrying out their duties responsibly so that users can make sound decisions for the smooth operation of the organization.
ReplyDeleteOperational auditors are expected to make use of audit phases that reflect independence and objectivity. Internal audit consists of five phases which includes selection, planning, execution, reporting, and follow-up. This audit procedure is applicable for both management and operational audits. To ensure a successful audit engagement, specific criteria are established for each phase.
Based on my opinion, all the five phases of operational audit are very essential and should never be taken for granted because these steps can give auditors the different techniques and methods that helps in obtaining the necessary data and evidences that allows them to make judgements based on certain audit objectives and will be able to give reasonable assurance.
Therefore, it is necessary to take into consideration the fact that audit phases help to justify whatever the auditor does throughout the audit domain, so that supervisors understand the reason and rationale for the audit being conducted. These phases work hand in hand in order for the auditors to have a quality audit. Performing all these phases are important because they describe how things should be done and then provide a focus on the things we want to improve, and how they are done determines the success of the outcome. Remember, following the right processes in the right way leads the company to success.
If I were to audit a company here in the Philippines, I would choose SM Investments Corporation. We all know that this corporation is one of the biggest and leading company here in our country. I want to conduct audit from them because I want to discover and learn how they’re keeping their company value chain run smoothly and effectively in the competitive market. I believe that by working on a big company will help me nurture the knowledge and skills I have as an auditor. It will give me the opportunities and challenges in the industry that I need in order to become more proficient and continuously adapt on the changes in business environment.
ReplyDeletePlan: Select competent auditors, Screen auditees, Define audit plans and procedures, Define purpose and scope
We identify the different auditor program responsibilities and determine the person’s competence. Define the objectives and criteria as well as the audit team and assign their respective responsibilities. We need to keep track of the results and records we’ve gathered.
Do: Reference documents, Identify Administrative and Infrastructure Support, Collect Information
Examine all relevant documents. Prepare the audit plan, assign work as needed, and organize any necessary action plans and documents.
Audit: Audit Evidence
Review the documents as need throughout the process for us to verify all the informations we’ve collected to evaluate the company’s operations for accuracy and compliance.
Check: Evaluate Against Criteria, Audit Findings, Review Findings
The findings will either meet or fail to meet audit criteria. Record the supporting evidence for a non-conforming finding. Examine the data with the auditee to determine if the evidence is correct. At designated and/or appropriate audit stages, the team should meet to review findings.
Act: Present Report with Conclusions and Actionable
Information, Follow-Up to Answer Questions or Concerns, Follow-Up Audit
We, the audit team should agree on the conclusions, make recommendations, and discuss next steps. Having a closing meeting is essential to have the follow-up audit and successfully present the audit findings.
Reference:
Eby, K. (n.d.). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. Retrieved October 11, 2021, from https://www.smartsheet.com/operational-audit-process?amp
- Mendoza, Rhea Lyn (2019-101819)
1. Operational audit phases are steps to be taken by operational auditor to assess the day-to-day operation an organization. Steps taken to conduct operational audit includes selection, planning, execution, reporting and follow up phase. It is important to follow the steps in selection phase correctly. Selection is where the the management and leadership communicates with the auditors, the audit plan and the risks or two that will be an hindrance to their objectives. Planning phase is the step where the auditors will create a plan, defining the scope and necessary steps to meet the objective. Fieldwork phase is where the steps provided or formulated in the planning phase is conducted accordingly. Reporting phase is where the auditors communicates the outcome of their fieldwork and will give necessary recommendations to help the organization. Follow up phase is where the implementation of recommendations are observed thoroughly. Of all the phases it is must be obvious that the two most important phase is the planning and the reporting. As planning is the main structure of audit process and reporting is the communication of the result it is by far the two most important steps to be noted and shouldn't be taken for granted.
ReplyDeleteReferences:
Internal Audit. (n. d.). The Audit Processes. University of Kansas. https://internalaudit.ku.edu/project-process
Sinra. (n. d.). Operational audit: Definition, Processes, Example and Reporting. Wiki Accounting. https://www.wikiaccounting.com/operational-audit/
The Office of Internal Audit. (n. d). Audit Process. University of Oregon.
https://internalaudit.uoregon.edu/report/audit-process
2. If given a chance I would like to audit the ABS-CBN Corporation. ABS-CBN corporation is pretty known by us filipinos as one of the channels that is responsible for delivering news reports and entertainment. And as it close it greatly affects the filipinos as well as the filipinos. The reason why I want to audit it, if given a chance, is that I want to know what are the processes and policies they are taking that keep them so long and stops at the same time. If were given a chance, It would give me a lot of knowledge on how they conduct their internal control. And also I hope that I can make, promote or give additional value to this company as I conduct my audit. As an operational auditor, I would like to know and evaluate their day to day processes and policies.
ReplyDeleteReferences:
ABS-CBN CORPORATE. (n. d.). OUR COMPANY. https://www.abs-cbn.com/who-we-are/our-story
BBC NEWS. (2020). Philippine top broadcaster ABS-CBN denied new license. https://www.google.com/amp/s/www.bbc.com/news/world-asia-53360925.amp
Indeed Editorial Team. (2021). Guide to Operational Auditing: Definition, Processes, Advantages and Disadvantages. Indeed. https://www.indeed.com/career-advice/career-development/operational-auditing
3. To carry out your objective you must have plan it, do it, check it and act it. These steps are known method to carry out an effective evaluation and perform a change. It is primarily developed by Dr. Deming to evaluate why processes or products don't works. In conducting audit, the phases conducted is also represented by Plan-Do-Check-Act method. Auditing to be effective must have a checklist that represents pdca. In conducting audit to ABS-CBN corporation, here are my checklist that represents pdca: 1. Select and evaluate auditors, 2. Define plan and scope of audit, 3. Collect reference documents, 4. Collect Information 5. Identify Administrative Support, 6. Evaluate Audit Evidence, 7. Evaluate against criteria, 8. Audit findings, 9. Review findings, 10. Present and communicate report with conclusion and Actionable information, 11. Follow up audit with questions or concerns
References:
Go Cardless. (n. d.). What is an Operational Audit. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Kate Eby. (2021). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process?amp
MindTools. (n. d.). PDCA(Plan Do Check Act). https://www.mindtools.com/pages/article/newPPM_89.htm
Introduction of Objectives and Phases of Operational Auditing were presented this time. After knowing and learning the definition of operational auditing through the internet, the discussion about auditing will proceed on and on. The professional auditing process which was introduced by the University of Kansas contains five phases such as the Selection phase, planning phase, execution phase, reporting phase, and follow-up phase. Each phase has unique and different functions in establishing a successful audit report even so they are interconnected to each other. Also these phases are basically interdependent with each other since it is a followed step by step process which an auditor must genuinely abide to have an audit that is more concise and accurate. I really think that all of the phases which was mentioned above, are very important and should never be taken for granted ever. As I have said, all of them are connected and dependent with each other, if one phase is left behind then expect a worse outcome. The essence of the auditing process lies here. Hence, if I were to choose two phases among all of them, I will be going with the planning phase and the reporting phase. It was really a hard decision for me to finally finalize my preferred two phases. I was driven with an old quote but still considered a relevant one, “If we fail to plan, we plan to fail” by Benjamin Franklin. We really need to consume our time with planning carefully. In planning phase, we conduct a risk assessment for us to identify critical risks and potential issues. People who are involved and investing their time and effort here in the planning phase are well appreciated and a great contributor of the firm’s success. In this phase, the audit committee, audit staff members, and the clients need to set up a meeting regularly to solemnly discuss the identified great potential risks. The company’s success lies with the audit plan that they will establish for a specific span of time.
ReplyDeleteThe company that I would like to make an audit is the Meralco also known as the Manila Electric Company. The company has been operating since 1903 and founded a strong monopoly here in Metro Manila and nearby provinces. Through working with this huge company, I would bag a lot of learnings and experiences throughout the process. We all know that Meralco has made a lot of adjustments on their electric rates since then. I am really willing to audit its policies and procedures so that if I can contribute to the company better, it will impact the rate that it will charge to our fellow countrymen, hoping for a better flow of rates. Also, it is really a privilege to work with the country’s biggest contributor since it is really challenging and remarkable to execute the audit checklist that will ensure the efficiency and effectiveness presented by Audit Board:
1. Initial Audit Planning
2. Risk and Process Subject Matter Expertise
3. COSO’S 2013 Internal Control – Integrated Framework
4. Initial Document Request List
5. Preparing for a Planning Meeting with Business Stakeholders
6. Preparing the Audit Program
7. Audit Program and Planning Review
I really rely on this audit checklist made by the audit board since it really tackles and assesses risks appropriately. I believe that it will assure efficiency and effectiveness as it is surely used by some successful companies which are still existing and continues creating their own name in the field of business.
References:
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Audit checklist: How to conduct an audit step by step. (n.d.). GRC Software: Audit, Compliance & Risk Software | AuditBoard. https://www.auditboard.com/blog/audit-checklist-how-to-conduct-an-audit-step-by-step/
Colarina, Adrian Mark T.
CBET-01-501A
2019-105709
ReplyDeleteFollowing the right track and having a plan for the course of the business will bring significant positive outcome. Doing this thing right will not only bring a smooth flow of the business but also increase the efficiency of everything. Same goes to operational auditing, having a plan and following the right track will only benefit the business because Operational Auditing evaluates and assess every single thing in the course of the business for it to have a smooth run. Listing down the phases of Operational Audit is easy but asking what is more important of those five (5) is hard. For me the two (2) most important part of the phases would be Execution and Reporting. Execution is where the Internal Audit team is in charge of fieldwork. Regular status meetings keep clients informed about the audit process. As audit observations, potential results, and suggestions are found, we discuss them with the client. And Reporting phase is where A draft report is used to provide to the customer a summary of the audit findings, conclusions, and specific suggestions. Clients have the option of responding to the report and submitting an action plan with a deadline. These responses are included in the final report, which is sent to the appropriate level of management. I chose this two because the execution phase is where the auditors do the actual work, they look closely, evaluate, and assess the business from inside out. And I also chose Reporting because this is where the auditors and the higher ups will have a communication regarding the findings of the audits, what happened, what’s the problem, how to solve it.
As much as I want to say that I want to audit a big corporation like SM Investments Corporation, San Miguel Corporation, Nestle Philippines, Coca-Cola FEMSA Philippines, and etc. because they are known in our country and I find it fun and exciting being part of that company. I am not confident enough to do it because I don’t have any background or any knowledge when it comes to the auditing field. As a student who admits that he has no idea what to do in the auditing field, I want to audit something small, a partnership that has little number of transactions, a new business that has just been opened, etc. A good example is JLG Marketing that is located in Pasig.
In order to ensure and produce a quality and effective audit, an operational audit checklist of procedures is needed. Looking it up on the internet I found just the right thing. This operational audit checklist of procedures is divided into 5 different categories. Select Competent Auditors, Screen Auditees, Define Audit Plans and Procedures, and Define Purpose and Scope for “Plan”. Reference Documents, Identify Administrative and Infrastructure Support, Collect Information for “Do”. Audit Evidence for “Audit”. Evaluate Against Criteria, Audit Findings, Review Findings for “Check”. And lastly, Present Report with Conclusions and Actionable Information, Follow-Up to Answer Questions or Concerns, Follow-Up Audit for “Act”. This operational audit checklist of procedures will bring an effective audit.
References:
Operational audits 101: Processes, examples, and checklists. Smartsheet. (n.d.). Retrieved October 6, 2021, from https://www.smartsheet.com/operational-audit-process.
CPA, W., October 02, 2021, Apps, S. G. linkF. T. P. E. O., September 11, 2014, comment, 1, more, R., April 28, 2013, comments, 66, & December 14, 2011. (n.d.). Operational audit: What are its phases? OPERATIONAL AUDIT: WHAT ARE ITS PHASES? Retrieved October 4, 2021, from https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html.
Rodolfo S. Almonte IV 2019-101425
1. Each stage in the auditing phase is important. They have unique characteristics in getting things done. Personally, I think the phases that are essential in the audit process would be the planning and follow-up phases. First is the planning phase, as Hernan Murdock said planning is the most important part of the audit process. Most of the important work in the audit process is done at this phase, like the risk assessment, which is done at the enterprise level. The foundation of auditing is risk assessment, which is where you understand your company and plan audit procedures that can provide reliable information (Mcgrady, 2018).Furthermore, assessing priorities is part of planning which is important in allocating the company's available resources. Through this process, auditors should evaluate the company by doing interviews with specific employees, from which auditors can obtain information helpful in making their plan. They should also use the prior audit reports of the company to evaluate the prior company's procedures to determine if they contributed to attaining the company's objective. As a result, audit planning may be regarded as a critical component of the whole process. It is expected to be one of the first procedures inside an audit, and, as such, it is crucial in establishing the trajectory of the audit that will be done. In reality, audit planning enables auditors and clients to work in an organized manner in order to obtain better outcomes in the shortest period feasible. As a result, this procedure must be given the attention it deserves so that the remainder of the audit may proceed smoothly (wikiaccounting, 2021).
ReplyDeleteThe second most important thing is follow-up. This is where auditors evaluate if their audit is effective in achieving the company’s objective. They perform some corrective actions because they are not guaranteed after completing phases of audit processing; they must ensure that previously recommended plans and corrective action plans have been implemented and that the expected results have been achieved (TheUniversityOfTexas, 2022).As for auditors, it is important as this phase can tell if they have done their work well and effectively.
Mary Ann Cebuano (2019-106907)
ReplyDelete2. I chose Maynilad Water Services, Inc. As a customer of Maynilad, I have seen many of their projects. Like today, in our barangay they conducted road digging. When I asked one of their workers, he told me that their project was to change the pipe line for a bigger one. I was wondering why they had to start their project in the late summer, when there is a big chance that it will be rainy, given that our country experiences a rainy season after the month of May. Also, I really struggled during those times as I was attending my online classes because their equipment was too noisy given that our house is near the road. Furthermore, after they dig our road, it takes a lot of weeks before they start to install new pipe lines, and the worst scenario is when they just use bags of sand to cover those pipe lines, which is not suitable for our barangay because it is a flood prone area. So, it happens that every time there is a heavy rain, those sand bags are just carried away by the flood and it causes lots of damage to our roads, which causes a lot of inconvenience to people.I want to know their procedure for submitting projects and its overall impact on the company. Are they reviewing their procedures for their projects? Did they consider those as additional costs? What will happen after reviewing the project? Did it even make any difference in attaining the company's objective? How about their timeframe? Is it being achieved? Is optimizing efficiency achieved?
3. To create an effective and efficient audit report, checklist is provided.
• Name of the auditor, and reason to audit
• interview the top managers, Shareholders, and board of directors and review the company's overall performance
• Set objectives in better assessing company's processes to attain company's objectives
• the purpose and scope of audit
• gather relevant information and prior audit reports
• Hold a meeting to ensure that all stakeholders are on board with the suggested plan. Introduce team members to one other and to management.
• Review all gathered information, audit evidences and evaluate
• Again, conduct meeting with the auditees as you would review all the findings, show them evidences and team would now need to be done with appropriate audit stages.
• after reviewing, Recommendations and conclusion are to be discuss.
• Integrate monitoring and measurement requirement.
• integrate processes for continuous improvement.
Audit Process. (n.d.). UT Austin. Retrieved October 13, 2021, from https://audit.utexas.edu/audit-process
H. (2020, June 16). Understanding audit risk assessment procedures. Henry+Horne. https://www.hhcpa.com/blogs/audit-accounting/audit-risk-assessment-procedures/
Sinra, K. (2021, July 24). Why Audit Planning Is So Importance? (Explained). Wikiaccounting. https://www.wikiaccounting.com/importance-audit-planning/
Mary Ann Cebuano (2019-106907)
All phases are equally important as they are all needed to systematically and thoroughly assess the effectiveness and efficiency of an organization’s operations from a future-oriented perspective. But the two phases that stood out the most for me is planning and fieldwork. Both phases are interconnected with each other, without plan, there’s no action to take.
ReplyDeleteDuring the planning phase, auditors gather relevant background information and initiate contact with the client. The different issues identified in the overall audit strategy are addressed through planning, which takes into account the need to meet the audit objectives while maximizing the auditor’s resources. To put it another way, the audit plan lays out the particular procedures that must be followed in order to implement the strategy and complete the audit. On the other hand, fieldwork is the execution of what is planned. During this phase, the audit team will physically be on site at the audit client’s location performing the audit. They preformed works such as : review supporting documentation, interview department personnel, perform analyses, identify exceptions & recommendations for improvement, prepare written audit findings and provides written response and corrective action plan for findings. Therefore, without these two, a company cannot proceed to report and follow-up the informations because these phases will be the foundation of overall operation.
Sangol, Learein J.
2019-106977
CBET 01 – 503A
Part 1/2
According to Statista Research Department, the statistic shows that as of 2020, BDO Unibank was the largest company in the Philippines with a profit of approximately 860.7 million U.S. dollars, followed by Metropolitan Bank & Trust, with about 840.3 million U.S. dollars.
ReplyDeleteSince BDO Unibank is one of the most trusted banks of the Philippines, as an auditor, I would like to audit them to ensure and determine whether the financial actions of the institution are accurate, legitimate, and complete and make unbiased assessment of the bank’s operations, controls, and information systems. Therefore, I believe that bank auditing are essential for guaranteeing a financial institution’s and its practices’ integrity. Auditing a financial organization and responding to the criticism it receives protects not only its management, but also its shareholders, creditors, lenders, and clients.
A financial entity must keep track of all transactions at all times. A comprehensive and unabating review mechanism is required for a business like a bank. To ensure that the audit will be effective, I’ll provide the following audit checklist procedures:
- The branch promotes client business plans that in the auditor’s opinion are intelligent and attainable.
- Client thumbprints or signatures appear on all loan contracts.
- Loan disbursement procedure is strictly and consistently followed.
- Less than 1 % of portfolios are at risk in one calendar year.
-The growth rate in the loan portfolios is in the auditor’s opinion acceptable.
- Reimbursement records are free from arrears on any external or internal loans.
- Overdue debts are written off for the year in which they occur.
- Client drop-out is recorded and monitored.
- Client files are properly protected.
- Interest due the branch is calculated accurately and collected consistently.
- The collection of arrears occurs with prompt and continuous action.
- Identify general operations and specific internal controls that need improvement.
- Verify compliance and confirm policies and procedures are up-to-date with any recent changes to laws and regulations.
- Review the adequacy of risk management strategies.
- Offer objective insight concerning the organization’s control environment.
References:
Internal Audit Checklist for Banks — Reciprocity. (n.d.). Retrieved October 15, 2021, from https://reciprocity.com/internal-audit-checklist-for-banks/.
Internal Audit Process. Office of Internal Audit. (n.d.). Retrieved October 15, 2021, from https://internalaudit.wayne.edu/process.
Statista Research Department (2021, June 21). Philippines: Largest companies by profits 2020. Statista. Retrieved October 15, 2021, from https://www.statista.com/statistics/993327/philippines-largest-companies-by-profits/#:~:text=As%20of%202020%2C%20BDO%20Unibank,about%20840.3%20million%20U.S.%20dollars.
Sangol, Learein J.
2019-106977
CBET 01 – 503A
Part 2/2
(1/2)
ReplyDelete“Before anything else, preparation is the key to success.” Quoted from the Scottish-born inventor, scientist, and engineer - Alexander Graham Bell. The first time I heard this quote when I was 14 years old, I told myself to prepare and plan everything before doing something else. But it took me 4 years to better understand what Alexander Graham Bell wanted to say. Planning is easier said than done. You have to detail everything as much as possible. You need to make a backup plan in case the proceeding plan fails. You need to gather all the information and resources to better perform and do the job. And as an operational auditor, this must be the starting point to perform audit activities. Making an effective and detailed plan means that you have the will to do it. A simple plan will not drive you to execute it because you didn’t give time and effort. Create a well designed plan and the execution will follow.
Another important phase that an operational auditor should never be taken for granted is the reporting phase. This is where the decision will be made between the auditor and the top management, especially the board of directors of the company. The decision will make or break the success of the company in the future, as those decisions will start to formulate in the reporting phase of auditing. As an operational auditor, one must disclose all the findings, observations, and conclusions regarding the audit. And when the decision is made, the updated and improved process, policies or system will apply to the company to ensure the effective and efficient operation of the business. With all the decisions made, a follow-up must be reported back to the auditor and top management to verify the changes that have been made. If the operational auditor doesn't report everything that they find from the audit, then the company will suffer a bigger risk and potential threat in the future. The goal of improvements and mitigating risks will not be achieved if an operational auditor failed to disclose their findings and observations.
(2/2) continued...
ReplyDeleteI’ve always wanted to be involved in the film and entertainment industry because it is very close to my heart. And so, it would be awesome to work and audit the Viva Communications Incorporated or formerly known as Viva Entertainment Incorporated. They have been in the industry for 4 decades producing quality films and movies. Viva Entertainment also produced very talented and world-class artists that received numerous awards in the national and international scene. But just like other film companies, Viva Entertainment still follows their traditional kind of filming, and only caters to the Filipino market. With the advancement of technology, they have been left out by other film businesses that have been operating the year they started. And with this, it’s better to audit their operation, policies, and process to ensure that they can compete not only nationally, but also on the global stage.
To begin the internal audit, identify first what are the departments that need to be audited. Some departments have complex procedures while some have simple processes. Choosing the areas that are required to review will greatly help the company to identify the risks that are present and the potential risks that the function will encounter. After identifying the departments that need to be audited, determine how often the audit is going to be done. It is not appropriate to audit the department frequently that have low risks that are present. There are some departments that need to be audited frequently, and some are just annually. Next is to make an audit calendar. This is to schedule what day or months the audit team needs to perform. Scheduling ensures that audit is consistently done on the business calendar. When it is time to audit, one should send a notice to the department that they are going to audit for them to prepare all the necessary documents in time. Unless there is a suspicion of unethical or illegal activity, an auditor can do a surprise audit. Before you conduct an audit, you should be prepared on what are the processes or policies that the department is following. Being prepared and having knowledge can help the auditor work efficiently. In performing the audit, there are many ways that an auditor can do. One can do inquiry, confirmation, inspection of records or documents, inspection of tangible assets, observation, recalculation, re-performance, and analytical procedures. After the activity, the auditor needs to document and gather all the results from the activity to make a report based on the findings. Finally, an auditor must provide an audit report that is simple to understand. These reports should be discussed with top management, and an improvement plan should be established for areas where practice compliance gaps exist.
Sources:
Accountinguide. (2020, July 30). Audit Procedures. Accountinguide. Retrieved October 15, 2021, from https://accountinguide.com/audit-procedures/.
AuditBoard. (n.d.). Audit checklist: How to conduct an audit step by step. AuditBoard. Retrieved October 15, 2021, from https://www.auditboard.com/blog/audit-checklist-how-to-conduct-an-audit-step-by-step/.
Lotich, P. (2020, June 10). 8 steps to performing an internal audit. The Thriving Small Business. Retrieved October 15, 2021, from https://thethrivingsmallbusiness.com/internal-audit-process/.
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Dusayen, Bernard I.
2019-106143
CBET-01-501A
1/2
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
To begin with, auditing is a critical process in any organization. Depending on the needs of the organization, the process can be carried out by either an internal or external auditor. Furthermore, many companies have invested in the auditing sector by appointing highly qualified employees as internal auditors to ensure that everything in the auditing sector is in order. In an organization, precise auditing is carried out in stages that are important and relevant. The outcome of one auditing phase has an effect on the other auditing phases in some cases.
Planning, like many other aspects of a project, is critical to the success of any organization. This is because the auditing phase aligns all of the documentation required for the development of an ideal approach that will operate throughout the audit work. Scoping, budgeting, defining the population of interest, determining how testing will be performed, and announcing the audit are all part of the planning phase. The most important aspect of an audit is undoubtedly planning. Poor planning results in inefficient auditing practices because testing activities that can be combined or strategized are instead done one at a time; selecting and reviewing transactions together is instead done as multiple steps, and rework is common because procedures are poorly initiated only to be rearranged and additional information examined later. Finally, it leads to inefficient meeting scheduling with process owners and other stakeholders.
Fieldwork is the term used to describe the process of carrying out an audit. It is the phase in which information for audit is gathered and lasts from the time the audit team arrives at the audit location until the exit meeting. Fieldwork is essential because audit clients will be kept up to date on the audit process via regular progress meetings and/or communications throughout the audit. When audit observations, open risks, and proposed recommendations are identified, the audit team makes every effort to discuss them. In some cases, working directly with audit clients to ascertain or validate the underlying cause and discuss ways to remove the root cause is necessary.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
San Miguel Corporation is the largest and most diverse conglomerate corporation in the Philippines. And it was founded in 1890 as a single-product brewery, but it is now a highly integrated leading business with investments in various sectors such as beverages, food, packaging, energy, fuel and oil, and so on. San Miguel Corporation is a company/business I'd like to audit.
I admired how the SMC stays in business for the long haul and expands its operations in a variety of fields. However, I'd like to audit them because I'd like to see/understand how they manage their internal controls. I'd like to assess how they manage the effectiveness and efficiency of their resources. On the other hand, I'd also like to investigate whether there is any illegal activity going on in their company and whether they are in compliance with government regulations.
2/2
ReplyDelete3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Planning
Audit Universe (scope)
Risk Assessment Methodology
Strategic Audit Plan
Annual Audit Plan
Coordination with other Assurance Providers (if applicable)
Fieldwork/Execution
Audit engagement planning
Preliminary Survey
Development of Audit Objectives
Audit Program
Working Papers
Internal Audit Techniques
Internal Control Assessment
Audit Evidence
Supervision
Fact-finding Sheet
Closing Meeting
Reporting
Reporting on the internal audit engagement
Intermediary report
Draft report
Final report
Reporting to Authorities in case of Irregularities (Fraud)
Follow-up audit recommendations
Activity Report
Annual Audit Opinion/Statement Assurance
Record Retention
REFERENCES:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC. pp 36.
Internal Audit Community of Practice (n.d.) Good Practice Internal Audit Manual Template. Retrieved October 15, 2021, from https://www.pempal.org/sites/pempal/files/attachments/IA Manual Template v1.pdf
ARONCE, MARY ANGELOU N. 2019-105627
1/2
ReplyDelete1. An organization conducts an operational audit to evaluate past performance, develop a new strategy, put these plans into action, and report the results to the organization. Every organization strives for overall success, and audits are performed and completed to ensure that business improvements are realized or the entity's operations are maintained. The audit findings and reports are critical in evaluating and investigating areas of management practices that need to be adjusted. This is a comprehensive management action that necessitates extensive data and information gathering in order to achieve company objectives.
Auditing standards must be followed in order to successfully govern audits. These could be used to determine whether the organization is more productive, profitable, and competitive. Furthermore, when conducting an audit, an enterprise must consider audit phases. However, I believe that the planning and fieldwork phases of an operational audit are the most important and should not be overlooked. Scoping, budgeting, defining the demographic of interest, determining how testing will be conducted, and announcing the audit are all part of the planning phase (Murdock, 2017). The audit staff reviews previous audits, assesses risks, develops audit plans, and schedules planning meetings in this phase. Poor planning means that the company does not have a clear picture of what is expected as they work, that there is no deadline, and that the audit team is complacent. As a result, the audit will be completed late. This will result in significant business loss and a failure to build positive relationships with future clients.
The majority of the testing is then done in the fieldwork, which includes interviewing, documenting, applying testing methodologies, managing fieldwork, and providing status updates (Murdock, 2017). Auditors gather evidence to support their work. Auditors scrutinize records to confirm the date, number of transactions, agreements signed by various parties, evidence of authorizations, and record of decisions made. It is a useful tool for locating areas in management procedures where errors and mistakes have occurred. Auditors conduct observations and inspections to assess effectiveness.
2/2
ReplyDelete2. The areas of scrutiny in an operational audit will differ depending on the type of organization being audited. If I could audit one company in the Philippines, it would be DMCI Holdings Inc. It is a major Philippine infrastructure corporation created by Isidro Consunji, a Filipino-Chinese businessman who served as transportation and public works minister under Ferdinand Marcos in the 1970s. Its business segments are Construction and Others, Coal Mining, Nickel Mining, Real Estate, On-grid Power, Off-grid Power, and Water. I would like to assess their physical facilities, working conditions, and procedures. Identifying risks to their business that should be mitigated, as well as contributing to their company's overall success by taking corrective action.
3. To ensure that the audit is effective, I must keep the operational audit checklist of procedures in mind. GoCardless provides a checklist of operational audit procedures; see the citation below to visit their website. This includes the following:
Select and screen auditors
Define audit plans and scope
Pull together reference documents
Identify administrative support
Research operational procedures
Collect statistical evidence
Audit evidence from all sources
Evaluate evidence
Compile audit findings
Share audit conclusions
Give actionable advice
Follow up with questions and concern
It is critical to ensure that auditors are adequately prepared for their responsibilities. Planning is the framework of an audit process; without it, no step can be completed. This serves as a road map for the audit team's efforts. Conducting research on how to carry out the audit plan in a systematic manner is accomplished through the use of technology. The audit process will be validated using prior audit reports, workpapers, and personal observations. Management assistance is also required when conducting an audit because the audit will not achieve its objectives without it. Following the collection of evidence, the audit team should review it and compile audit results. Furthermore, the audit team must be updated on the latest auditing standards. Giving advice to customers and responding to follow-up questions is critical for management in determining whether their audit plan is strategic and provides opportunities for the firm to succeed.
References:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
Nikkei Asia (2021) DMCI Holdings, Inc.: Company Background. https://asia.nikkei.com/Companies/DMCI-Holdings-Inc
Accountants GoCardless (n.d.). Operational audit checklist. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Alcantara, Shiela Mae D. – 2019-103506
I BELIEVE THEREFORE I WANT TO ACHIEVE!
ReplyDeleteOperational Auditing is very essential to earn trust in the market. It helps to establish that there are no material misstatements in the financial statements of the company, and the company is free and fair from all types of frauds during the operation. There are five phases in operational auditing. These are Selection, Planning, Execution, Reporting, and Follow-up phases.
Of all the phases of Operational Audit, I believe that the two phases that are very important and should never be taken for granted are the planning and execution. The first and most important is planning because this is where the plans and ideas are created. It is important to define the company’s objectives and set goals to be achieved. This also enables to know the scope of an audit that is important in order to not lose focus on it. In short, this is the starting point to execute your plans. Planning phase is important and never be taken for granted because as what the proverb said, “Failing to plan is planning to fail”. Another one that I also considered very important is the execution phase. This is mainly because the things that are planned first will apply or execute in the operation. It is also the phase where the opening and discussion of the meeting is conducted. It is important so that there is an agreement from all parties towards the audit plan including its scope and approach. It should never taken for granted because it is an intense period of activity of managing teams, analyzing information, executing testing, making judgments, documenting work, and interacting with clients. This phase is where the auditing takes place.
If I were given a chance to audit one company here in the Philippines, I would like to audit San Miguel Corporation. It is because San Miguel Corporation is one of the biggest companies here in the Philippines. I would like to know first on how they began in processing their product with their limited budget until it becomes one of the major products here in our country. Second, how they managed to audit the input and output of their income as their company becomes bigger and bigger. As an auditor, it is my duty to know what are the risks they are encountering and I’m excited to give modifications about it. There are lots of things that I really want to know about them and I want to be part of them. If I were given a chance, I promise to myself that I won’t let that chances pass.
As an auditor of San Miguel Corporation, I will provide an operational audit checklist of procedures to ensure that audit is effective. First, I will have selection and screening of auditors. The appointment of audit staff members is the people who are perfectly suited for the job position. Then, I will define the audit plans and scope of the operations to not lose focus on it, as well as having a reference documents for its verifiability and objectivity. My audit teams will conduct a research operational procedures for the improvement and betterment of the audit operation. In collecting statistical evidences, I will audit those evidences by evaluating its sources if it is reliable enough to rely on. Afterward, I will compile all audit findings and share audit conclusions with all parties to have their agreement and opinions. In targeting an organization’s goals and key objectives of the management, I will help them in giving actionable advice especially when it comes to mitigating the risks of the corporation. Last but not the least, as an auditor of the company, I will never missed to follow up with questions and concerns regarding the policies, procedures, and plans of an organization.
REFERENCES:
Go Cardless. (n.d.). What is an operational audit?. Accessed October 14, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Taylor & Francis group.
HEDREYDA, HILARY N. (2019-103876)
The audit phase is the standard followed by an auditor for the effective and accurate execution of the audit. Every audit phase is essential, but I think that planning and fieldwork are the most vital phase.
ReplyDeleteIn everything we do, planning is inseparable as this helps us assess every possibility or circumstance that we might encounter, thus, allowing us to attain the goal we set. As stated by Antoine de Saint-Exupéry, "A goal without a plan is just a wish." Same with auditing, it is a necessity to plan the entire process to be taken. The plan made by the auditor will serve as the foundation of the audit and would affect the execution and outcome of it.
Putting into action the plan made is equally vital as a plan without action is nothing. The performance of it is called fieldwork and is the phase where the auditor will conduct the audit. The fieldwork consists of determining the effectiveness of the process toward achieving goals and verifying their execution per the management (Murdock, 2017). The proper performance of the first two-phase will lead to the success of the following phase, therefore, ensuring the best result.
Among all the companies in the Philippines, the company I want to conduct an audit on is the center of controversy now, which is the Pharmally Pharmaceutical Corporation. I want to assess their operation and understand the reason behind the controversy surrounding its contract with the government. But as an internal auditor, it is my responsibility to maintain confidentiality. Thus, I will use the audit report to provide the company with a better plan to conduct its operation in the future.
Ensuring the effectiveness of the audit is the primary responsibility of an auditor. Thus, a series of the procedure provided below will allow for the success of the audit.
Context of the organization - In-depth knowledge of the company will allow the auditor to assess the company base on its goals and objective, thus addressing issues surrounding its operation.
Leadership - It is a must to produce audit results that are by the strategic direction of the management.
Planning for the quality management system - This is the phase where the auditor will assess the issues surrounding the business and provide corrective action to mitigate the risks.
Support - Gathering the right people inside the organization who have the expertise and knowledge that will help you execute the audit.
Operation - The phase where the auditor will plan the best way to execute the audit and then the performance of the plan.
Performance Evaluation - The audit report will undergo the evaluation of the management to make sure that the result is beneficial and will allow for the effective and efficient function of the business.
Improvement - The feedback from the management is taken into account to produce a better result helpful for the day-to-day performance of the business.
The procedures provided are applicable not only for the chosen company but for every active company. Although I have chosen a corrupted company, it is not right to expose their misconduct as it is against the responsibility of an auditor. The only thing I can do is to make sure that the same thing will not happen again.
References:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World.
Reciprocity. (2021). ISO 9001 Internal Audit Checklist. Retrieved October 15, 2021, from https://reciprocity.com/iso-9001-internal-audit-checklist/
DIZON, JAKE C. (2019-106975)
Audit phases are the methods and processes that auditors use to analyze income reports and identify problems in the existing system in implementing a quick solution. Planning, execution, reporting, and follow-up are the stages involved. All of the mentioned phases are essential, but in my perception, the planning and reporting phases are by far the most important in auditing because they help the auditor undergo an effective audit and produce an unbiased evaluation given the available data and their understanding of the company. The planning phase is critical because it allows the auditor to assemble the engagement, including selecting appropriately experienced personnel to deal with particular threats, so that it can be executed effectively and efficiently. During the reporting phase of a performance audit, auditors create and present reports that display their findings and conclusions, allowing management and auditors to converse in a timely manner about the state of the results and suggestions.
ReplyDeleteAuditing entails reviewing, analyzing, and assessing processes, products, services, systems, organizations, and employees. The role of auditor is essential because it offers management and external parties with a precise analysis of the organization under their governance. As a future accountant and auditor, I want to be a part of the Nestle team and acquire adequate and relevant evidence to form an opinion on the financial statements. Auditors assess the validity, plausibility, dependability, reliability, and promptness of organizational information, as well as the inputs and processes used to generate that relevant data. As a member of their team, I have the ability to check internal controls and the scope to which these control systems manage an organization's potential losses.
To be a more effective auditor, we must provide an operational audit checklist. This checklist is intended to make the process easier of preparing and implementing out a management system audit. Regardless of the management system type, context, depth, or extent of the audit, the checklist can be used to adjust the audit program to the particular criteria of the audit. The first item on the checklist is to establish objectives, which should be based on organization objectives and ambitions. This is to take into account the attributes of materials, projects, and processes, as well as any modifications to them. The next step is to establish the audit program, which will help to evaluate the scope and possible dangers, as well as standardized procedures and identify resources. The audit program is then implemented and monitored to identify the objectives, scope, and criteria, as well as to evaluate the effectiveness of the audit team members and their ability to carry out the plan. The final step is to review and enhance the audit program. At this stage, you must review whether the objectives were met and apply all of the knowledge gained to optimize all of the resources necessary for the auditing procedure. The audit program's outcomes and patterns, compliance with procedures, the emerging needs and expectations of the stakeholders, records, substitute or new auditing methods, the effectiveness of the initiatives to tackle associated risks, and confidentiality and information security concerns should all be considered during the evaluation.
References:
Bhasin, H. (2020, April 13). What is Auditing? Four Phases Of The Audit Cycle. Marketing91. Retrieved October 15, 2021, from https://www.marketing91.com/what-is-auditing-definition/
Eby, K. (2017, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. Retrieved October 15, 2021, from https://www.smartsheet.com/operational-audit-process
SALVO, MARY ROSE E.
2019-102485
CHAVEZ, CATHERINE H
ReplyDeleteCBET-01-502A
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
Operational auditing differs from traditional auditing as to its purposes wherein the former refers to the method of examining the operation of an organization, which focuses internally, through financial records and other evidence from different departments that are essential to perform the operational audit effectively. However, as to its structures, it is sort of similar to traditional auditing that comprises the sequence of planning, fieldwork, reporting, and follow-up. Each consists of activities that occur during their performance. If I were to list the two most important phases, these would be the fieldwork and phase of reporting.
According to Hernan Murdock, “Fieldwork is the next phase in the engagement’s life cycle. This phase is when most of the testing is performed, and it includes interviewing, documenting, applying testing methodologies, managing fieldwork, and providing status updates. It consists primarily of two things: determining if the process or program under review is designed effectively so that the related goals and objectives are likely to be achieved; and verify that the controls in place are performing as designed by management” (p. 41). This phase is also the action phase where all plans and methods made are applied, tested, and documented, most of the audit evidence, such as financial records, paper works, and data in graphs representing the results of applications of plan created, are in this phase and we all know that evidence is vital in auditing because of the fact that examining and decision making will be based on it. On the other hand, reporting is the third phase of operational audit where the communication of findings, observations, and best practices noted during the review, and developing recommendations for corrective actions happen. Reporting is vital in the field of auditing where good communication skills must be possessed as I said in the previous lesson as for reason that how would one perform an effective audit if the data assessed won’t be communicated to targeted users or the clients, thus gathering and examining evidence is not enough, it must be reported to the organization.
Reference:
Murdock, H.
(2016). Operational auditing: Principles and techniques for a changing world. Operational Auditing The Principles Techniques for a Changing World.pdf (e-rtu.online)
CHAVEZ, CATHERINE H
ReplyDeleteCBET-01-502A
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
Among the big companies in the Philippines, I chose to audit the field of manufacturing business particularly the Nestle corporations. According to the Corporate Social Responsibility (CSR) of Nestle, Nestle Philippines Incorporated is a large-scale, well-known international food manufacturing corporation engaged in the manufacture of instant coffee, milk, and ready-to-cook noodles. As an accountancy student that is aiming to work in an audit firm someday, to engage in the area of cost accounting, and just started to study and learn about internal auditing, I am interested in how this big corporation operates and how are they keeping the organization as strong until today, given the fact that Nestle started in 1911 which is more than a century now. I am also eager to know how they manage the internal and external factors that can affect their operation especially the environment around them. Furthermore, I would also love to be part of their successful operations and provide an effective audit in order to help them solve any problems in the organization and to be well-prepared for the future risks that might affect the operation.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Nestle Incorporated is one of the largest manufacturing businesses in the Philippines, hence a complex operational audit procedure is necessary for it to be audited effectively. Based on the various cycles and procedures that I’ve seen on the internet and commonly used by operational auditors in manufacturing businesses, the following audit process is the most accurate and applicable for this.
1. Planning – the operational auditor notifies the client about the scope and objectives as well as gathers important processes. This phase also includes the initial meeting.
2. Preliminary Survey - in this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations.
3. Internal Control Review – auditor uses a variety of tools and techniques to gather and analyze information about the operation
4. Audit Program - concludes the preliminary review phase. This program outlines the fieldwork necessary to achieve the audit objectives.
5. Fieldwork – this phase concentrates on testing and application of the methods made. This phase also consists of transaction testing and informal communications with the client.
6. Audit Summary - the auditor summarizes the audit findings, conclusions, and recommendations necessary for the audit report discussion draft.
7. Audit Report – discussion of the rough draft with the client prior to issuing the final report. This phase also consists discussion draft, exit conference, and formal draft.
8. Final Report – auditor communicates the final report of the examination of the organization’s operations.
9. Client Response – the client can give feedback, ask questions, and may even recommend.
10. Audit Follow-Up - to verify the resolution of the report findings
11. Follow-up Report - lists the actions taken by the client to resolve the original report findings.
References:
AuditNet
(2021). AuditNet: The global resource for auditors. The Internal Audit Process from A to Z: How It Works! - AuditNet
Nestle
(2013) About us: Everything you need to know | Nestlé Philippines (nestle.com.ph). Corporate Social Responsibility (CSR)of Nestle (slideshare.net)
Garcia, Helen Grace M.
ReplyDeleteCBET 01 -503A
2019-106976
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
Each phase of the operational audit is distinct and equally important because they all play an important role in conducting the audit properly and effectively. These phases are connected, which means that one cannot be accomplished without the assistance of the other. However, I believe that these two phases, planning and reporting, exceed an inch of importance among the others.
Furthermore, the planning phase is important because it documents all of the information required to effectively and efficiently assess or evaluate the business's activities and serves as a foundation for progressing on to the next step. The audit plan also acts as guidance to the auditor in order for the audit to be performed correctly and to produce an adequate quality report. (Chicago State University, n.d.). As we all know, the most important aspect of operational auditing is planning. During this phase, the auditor will meet with the client to determine the nature and system of the business, audit objectives and scope, and other information that will assist in the preparation and organization of the audit plan. In this phase, all relevant information, ideas, reviews, and resources are used to develop a plan for the audit's execution. The audit plans detailed the audit strategies, techniques, risk assessment, cost analysis, resource and budget management, timeframe, and other issues.
The reporting phase, on the other hand, is when the auditor presents and communicates to management the observations, conclusions, and audit findings, whether positive or negative, as well as the recommendations. In addition, the responses and action plans of management to each recommendation will be incorporated into the final audit report, which will be sent to the appropriate level of administration. (The University of Kansas, n.d.). As a matter of fact, these two phases, along with the other two phases of operation auditing: fieldwork and follow-up, are pivotal in operation auditing.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
I have a list of companies I'd like to audit, and one of them is Unilever Philippines. It's because they are one of the greatest companies around the globe and I'm keen to know about how they manage their business in the long run while also promoting sustainable agriculture. Furthermore, the Unilever Group was named the fourth largest FMCG company in the world in terms of sales in 2019, and their global media perception is generally positive. (Ridder, 2021). With that, I admire them and want to scrutinize their operations.
And as an auditor, I would like to undertake an audit of Unilever's operations and documents to ensure that they are in full compliance with the law and standards of various regulatory boards, to determine if their financial activities and statements are accurate, factual, or sound, to observe if there are any irregularities or frauds in the course of business, identify risks, and provide modifications or strategies for the improvement of the performance of the business.
Part 1 of 2
Garcia, Helen Grace M.
ReplyDeleteCBET 01 -503A
2019-106976
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
As per what I've learned, the operational audit checklist varies by business because it is determined by the nature of the business and the scope of the audit. And, in order to ensure the effectiveness of an audit, the auditor must prepare, organize, and plan an operational audit checklist to assist in the examination of the business. The process for building a successful or effective audit is presented below.
First and foremost, we must select and screen auditors, define audit plans and scope, collect reference documents, identify administrative support, conduct research operational procedures, obtain statistical evidence, audit evidence from all sources, and evaluate the evidence. Then, compile audit findings, present and communicate conclusions, offer actionable advice, and finally, respond to questions and concerns. (GoCardless, n.d.)
References:
Chicago State University. (n.d.). Audit Process. https://www.csu.edu/internalaudit/auditprocess.htm
GoCardless. (n.d.). What Is an Operational Audit? Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Ridder, M. (2021, April 12). Unilever - Statistics & Facts. Statista. Retrieved October 16, 2021, from https://www.statista.com/topics/1397/unilever/
The University of Kansas. (n.d.). The Audit Process. Internal Audit. Ku. Retrieved October 16, 2021, from https://internalaudit.ku.edu/project-process
Part 2 of 2
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteThere are five phases in operational audit and it includes the selection phase, planning phase, execution phase, reporting phase, and follow-up. I think all of these phases are important because it is part of a process. Since, I was asked to choose at least two phases that is more important than the others I will choose the planning phase and execution or fieldwork phase. Planning is a very essential phase in auditing and even on our daily lives. Once we do have a plan on something we have a guide that we can use to fulfill a work that needs to be done. It is said that internal audit professionals obtain necessary background information and establish communication with the customer during the planning phase of each project. Every audit necessitates planning, from determining the scope and goal to establishing audit stages to achieve the goal. At the beginning of the audit, internal audit meets with management to discuss the audit's purpose, risk factors, and other logistics. Management is involved in the planning process, and the specifics are documented in a planning and scoping memorandum. The other phase that I think is very important is the execution or the fieldwork phase. Fieldwork is the stage of the process in which transactions, papers, and records are examined to confirm that the controls established by university administration are in place, adequate, followed, and running efficiently. An exit meeting will be arranged when the fieldwork is done to discuss the audit results and any appropriate corrective action measures. The Internal Audit staff conducts fieldwork after the audit has been planned. These two phases should not be taken for granted just like the other phases. All in all, just like what I have mentioned above, all of this phases are significant in an operational auditing and all of this are part of the process and should be follow in order to have an efficient and effective auditing.
LIGUTAN, JAQUELINE V. (2019-104055)
PART 1 OF 2
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
ReplyDeleteOut of all companies in the Philippines, I decided to choose an e-commerce company which is SHOPEE Philippines. I know some of us are familiar with this online shopping website and I think it would be great if I have an opportunity to audit this company. To give you a short description of this company, Shopee Pte Ltd is a Singaporean multinational technology company which focuses mainly on e-commerce. It is an app-based platform and was launched in Singapore as a social-first, mobile-centric marketplace where users can browse, shop and sell. Personally, I am fond of ordering in this website especially during sale. I wanted to audit this company for the fact that I am curious on how do auditors audit a company with broad scope. I also wanted to do an operational auditing in this company because it is one of the popular online shopping site here in the Philippines. Also, during this pandemic most of the people order product and goods to this platform because of the lockdown.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
The term "audit" refers to the process of conducting a financial examination of all aspects of your business. This is especially critical for e-commerce enterprises because everything is done online. It also includes all of the important aspects of the ecommerce business, such as SEO, content, site performance, conversion rate optimization, platform analysis, and so forth. It's the most effective way to figure out what's wrong and where you can improve Since, SHOPEE is an e-commerce company, the operational audit checklist of procedures for it are the following such as: E-commerce analytics, Market research, User experience (UX), Usability, Accessibility, Page speed, Search Engine Optimization (SEO), written content, and Imagery of the website. The operational auditor must have these operational checklist of procedures to ensure that the audit is effective and efficient.
REFERENCES:
Arcadia University. (n.d). Audit Process and Phases. Accessed October 15, 2021 from https://www.arcadia.edu/university/offices-facilities/finance-administrative-services/office-internal-audit/audit-process
Grabillo, M. A. (2021). Operational Audit: What Are Its Phases? Accessed October 15, 2021 from https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Palmere, T. (2019, March 29). Your Essential e-commerce Website Audit Checklist for 2019.
Accessed October 15, 2021 from https://www.campaignmonitor.com/blog/email-marketing/your-essential-e-commerce-website-audit-checklist-for-2019/
Wikipedia. (n.d). Accessed October 15, 2021. Retrieved from https://en.wikipedia.org/wiki/Shopee
LIGUTAN, JAQUELINE V. (2019-104055)
PART 2 OF 2
As a result-oriented individual, I always look at the outcome of the things I have done and make it as my basis for evaluation if I met my expectation/s or not. In line with my personality, the two phases that I think is vital and should never be taken for granted in whatever the context are the planning phase and follow up or feedback phase. First, the planning phase is important as it would set-up the goals you want to achieve in the first place and it would have a domino effect to what would be the steps you need to do in order to achieve that certain goal. It allows an entity to get the work done accurately where it would avoid costly mistakes (Simplifytraining, N.D.). Planning phase would also emphasize on the procedures that one needed to make in order to reach that goal as this would be the preparation stage where everything needs to be taken account like resources, timeframe, manpower, and even contingencies. Next, feedback phase should never be taken granted because such phase is important for verification purposes. In such phase, it shall process the information after the auditing process and it would give a chance for the departments, that have been audited, to supply information that would further solidify the future actions needed to be taken. DeFranzo (N.D.). stated that top performing companies are there because they are constantly finding ways to improve where feedback is used as basis for improvement. Lastly, feedback phase is the most important, in my opinion, mainly because of two reasons; one, it verifies that the audit made would not be put to waste in which the result would be used to adjust and/or maintain the operational policies and; two, it would surely verify the necessary information that would only arise after the audit.
ReplyDeleteEven before the pandemic, numerous wireless internet connection companies receive backlash due to their poor service. Many Filipinos have been vocal about this and it even became a meme on social media. I would like to audit PLDT because, being the longest running telecommunication business in the country, many Filipinos are still unhappy of how they do their service, specifically, in terms of the value of the service alongside with its cost. If I were to audit PLDT, I would focus on better utilization of the current resources with the intention of lowering the cost in which would result to a lower subscription fee to its customers. The following would be my prepared operational checklist for PLDT:
1. Planning phase
Establish a goal of the min-max of resources for a lower subscription fee
Map-out the necessary actions needed to be taken
Choosing of right personnel
2. Fieldwork phase
Test and verify if the planned min-maximization of resources is attainable
Financial analysis (including forecast and/or budgeting schemes)
Various necessary actions: interviewing, documentation, and collecting of information
3. Reporting phase
Meeting to board of directors and/or managers
Stakeholders’ meeting
4. Follow-up
Review of adjustments
Verification of the budgeted/forecasted financial data to the actual data
References:
DeFranzo, S. (N.D.). 5 Reasons Why Feedback is important. Retrieved on October 12 from https://www.snapsurveys.com/blog/5-reasons-feedback-important/
Simplifytraining (N.D.). Organizing and Planning for success: What Employees need to know. Retrieved on October 12 from https://simplifytraining.com/course/organizing-and-planning-for-success-what-employees-need-to-know/#:~:text=Organizing%20and%20planning%20help%20you,achieve%20important%20goals%20and%20objectives.
John Patrick Abraham A. Bentulan (2019-106909)
CBET-01-502A
(1)
ReplyDeleteIt's quite difficult to choose which, among the phases are two important and should never be taken for granted since all of them have a significant contribution to the process of operational auditing. However, upon reviewing the aim of each phase, I would choose the planning and reporting phase.
Planning phase is about gathering relevant background information and initiate contact with the client. It is also about identifying the risks and determining the objectives and scope of the audit as well as the timing of fieldwork and the report distribution. Meanwhile, the reporting phase is the summary of the audit findings, conclusions, and specific recommendations are officially communicated to the client through a draft report.
I choose those two because if I relate it to myself, those are really significant in doing school works. Planning what need to be done first before making any execution to avoid wasting time if things go out the way I did not expect. To ensure that I have a lot of plans for different possible outcomes. Also, reporting phase where I assess what needs to improve, change, and maintain. If the plan works, then continue executing the same process over and over. Same as it goes to operational auditing. The changes vary depending on the type of risks and the constant changes happening in the entity.
(2)
Nestlé Philippines is the company I would love to audit if I were given a chance. This company is known as the world's largest company for foods and beverages. Their product has been part of our daily life. You can see their product, everytime in the groceries. Aside from the business purposes, they also focus on their corporate social responsibilities. Part of the success of the company is the good management and operational auditing.
My personal reason why I choose Nestlé Philippines is because of the challenge. Working in a big company will put me in the environment where I should prove that I am an asset rather than an expense to the company. I know that I will grow and learn a lot from how they complied with the policies and requirements and their process in auditing.
(3)
ReplyDeleteTo ensure that audit is effective. It needs to make sure that the process for this ensures that it will generates an accurate and relevant information. If I will be the one to formulate a phases or process in the auditing, I would used the one that Mr. Mark Anthony Grabillo provided to us in his blogspot which is the Plan-Do-Check-Act.
In the Plan phase, it will be all about establishing objectives and audit program. I will base objectives on management goals and priorities. Consider the characteristics of products, projects, processes, and any changes to them. Identify the responsibilities of the audit program manager and establish his or her competence of the person. In the Do phase, it where action is taken and implementation of plans. In the check phase, will be all about monitoring the action taken. Assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team members and the ability of the audit teams to implement the plan. Evaluate feedback of all stakeholders. Lastly, the Act phase is about reviewing and improving the audit program. Evaluate if objectives have been achieved. Use lessons learned as inputs for continual improvement. The review should consider results and trends, conformity with procedures, the evolving needs and expectations of interested parties, records, alternative or new auditing methods, the effectiveness of the measures to address associated risks, and confidentiality and information security issues relating to the audit program.
It is therefore shown that if this process is done in flow, there's a high chance of success in doing the main objective. It will benefit the company, employees, and its customers.
References:
Eby, K. (2017, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. Retrieved October 16, 2021, from https://www.smartsheet.com/operational-audit-process
Grabillo, M. A. (2021, October 2). OPERATIONAL AUDIT: WHAT ARE ITS PHASES?. Retrieved October 16, 2021, from
LOPEZ, FRITZ REIZEN V - CBET-01-502A
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteOperational audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans, of which the importance is respective to the assertion they are catering to. However, there are two phases that I think are arguably the most important and should never be taken for granted— planning and fieldwork. These two are somehow connected to each other and play a crucial role on the effectiveness of the entire audit process.
The planning phase of an operational audit is important because this is the phase where relevant background information is gathered so that the auditor can gain an understanding of the audited area’s size, responsibilities, and procedures in place. Also in this phase, audit objectives are defined and audit methodology is determined through the creation of an audit program, which is the blueprint for conducting the audit and accomplishing the audit objectives. In addition, this phase is important because auditors can also look at an organization’s audit history and review previous issues that may have been found beforehand. From here, the auditor will know the best time to begin the process
Fieldwork, on the other hand, is often referred to as an evaluation phase of the audit. This is also an important phase because it includes assessing the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures which are necessary to accomplish the objectives of the audit. In this phase, auditors can also work directly with audit clients and determine or validate the root cause and discuss ways to eliminate the root cause.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I were to choose a company in the Philippines for me to audit, I think it would be the KPMG RG Manabat & Company. This company is one of the top 5 auditing firms in our country and is on the line over alleged inflated financial statements of 2GO Group Incorporated, which are now being investigated by the Securities and Exchange Commission (SEC). As an auditor, we must ensure that the audit was in compliance with the Philippine Standards on Auditing. Those standards require that we must comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. With regards to the issues that KPMG RG Manabat & Company are involved in, I want to audit the company's balance sheet and income statement as of the closing date to ensure fair presentation of financial statements and establish accountabilities,
-ALMODIEL, CHENCEL-ANNMAE F.
(PART 1/2)
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
ReplyDeleteAn audit checklist is a tool that contains all the steps necessary to carry out an audit procedure. So to make sure that my audit is effective, here are some of the checklist that I've found out from GoCardless:
-Select and screen auditorsDefine audit plans and scope
-Pull together reference documents
-Identify administrative support
-Research operational procedures
-Collect statistical evidence
-Audit evidence from all sources
-Evaluate evidence
-Compile audit findings
-Share audit conclusions
-Give actionable advice
-Follow up with questions and concerns
References :
University of Oregon (2014). Audit Process. Uoregon.edu. Retrieved October
16, 2021 from https://internalaudit.uoregon.edu/report/audit-process
The University of Texas at Austin (2021). Audit Process. Audit. Utexas.edu. Retrieved October
16, 2021 from https://audit.utexas.edu/audit-process
Sofia Tomacruz (July 13, 2017). Doubts hound KPMG following the 2GO accounting scandal. Rappler. Retrieved October
16, 2021 from https://www.rappler.com/business/kpmg-2go-accounting-scandal
Accountants Go Cardless (n.d.). What is an operational audit? Retrieved October
16, 2021 from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
-ALMODIEL, CHENCEL-ANNMAE F. (2019-105222)
(PART 2/2)
1. Of all the phases of operational audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeletePlanning and follow-up are the most crucial parts of operational auditing, in my opinion, and should never be overlooked. One of the most vital aspects is planning, because having a clear direction from the start helps you stay focused on the goals and objectives that are critical to the day-to-day audit process' performance. Planning is an important part of the audit process because it allows the auditor to concentrate on the tasks that demand the most attention. This can also assist the auditor in identifying timely issues, saving time. The auditor's ability to complete their audit work and meet deadlines is aided by having a strategy in place. Audit planning also requires more attention since it aids the auditor in assessing the risk associated with the audit process so that they may strategize and devise solutions. The second critical part of operational audit is follow-up, because all four phases of the audit could be rendered useless if the suggestions are not completely executed in the field.
2. The specific areas of scrutiny in operational audit will depend on the type of business being audited. Choose at least (1) company in the Philippines you would like to audit and why?
The Philippine Health Insurance Corporation is one of the companies in the Philippines that I'd want to audit. We've all heard about the Philhealth scandal over the last six months, involving the theft of $15 billion in funds. In this third-world country, investing in a healthcare institution to achieve security is a necessary. Now that we're in the thick of this health-care crisis, it's natural to wonder if our money and contributions are in the appropriate hands. As an aspiring accountant, I'd like to audit this company because I want to be a voice for the people who have been harmed by this corruption. This is especially timely given our current battle with an unanticipated virus. I want to strengthen our health-care system while also improving the lives of Filipinos safer and more comfortable.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
1. Auditors must be carefully chosen and screened.
2. Plan and scope your audit.
3. Assemble a list of resources.
4. Find administrative assistance.
5. Investigate operational methods.
6. Assemble data.
7. Examine all available evidence.
8. Consider the facts.
9. Gather information from the audit.
10. Report on the findings of the audit.
11. Offer suggestions that can be implemented.
12. Inquire about any issues or questions you may have.
References:
Gartland, J. (2017). The importance of audit planning. Retrieved October 08, 2021, from https://www.journalofaccountancy.com/issues/2017/sep/importance-of-audit-planning.html
Chicago State University (2021). Audit process. Retrieved October 8, 2021, from https://www.csu.edu/internalaudit/auditprocess.htm
GoCardless (n.d.). What is an Operational Audit? Retrieved October 8, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Christian T. Casal (2019-103830)
ReplyDeleteAll phases are naturally significant in an audit. However, I would consider the planning and reporting phases as the most crucial part of conducting audit. The planning phase is an integral step in which the individuals assigned to perform the audit communicate with the clients, management and all the staff involved to discuss the audit scope and the objective of the examination. All relevant information related to the business and essential to the audit is reviewed, including evaluation of the company's existing process, procedure and control and its accordance to risk. In this manner, the auditor can gain a complete understanding of the company's operation and develop an effective and detailed audit program to be performed that shall address the problems and issues in the course of audit. The next crucial step is the reporting phase. During the reporting step, the auditor communicates the results, specific findings, recommendations and other observations to the leadership and management through a draft report. It is only proper that the clients are informed of the audit result since its primary purpose is for the auditor to identify the risk and optimize efficiency in the operation. The report encompasses recommendation for a corrective action plan that will assist the management in responding to the problems and risks. Additionally, the audit report will show whether the company's financial records are accurate or not and help correct misstatement of information material to the company.
Following the past news, I would choose to audit Philippine Insurance heath because I believe there is an apparent error in the governance and system, as well as irregularities that led to the disappearance of 15 billion pesos, which was supposed to aid the medical expenses of Filipino contributors. As Phil health objective, "To provide comprehensive health care services to all Filipinos through a socialized health insurance program that will prioritize the health care needs of the underprivileged, sick, elderly, persons with disabilities, women and children and provide free health care services to indigents". The current operational process of Phil health doesn't conform to their stated objectives. Hence, I would like to uncover the anomalies and mismanagement further because I believe that there is more to discover. Phil health handles significant funds of people. Therefore, it is right to ensure that the systems, governance, and control are as efficient as possible and comply with their responsibilities and the law.
My checklist would be separate into 5 activities mainly; plan, do, audit, check and act (PDAC) which also correspond to the phases of internal auditing. Plan will include: (1) Plan: Select competent auditors, (2) Plan: Screen auditees, and (3) Plan: Define the purpose and Scope. The Do will include: (1) Reference Documents, (3) Collect information. The audit will include; (1) audit evidence. The check will include; (1) Evaluates against criteria, (2) Audit Findings. (3) Review findings. The Act will include: (1) Present conclusions with recommendation for corrective action, (2) Follow-up to answer question and concern, and (3) Follow-up to audit.
Smartsheet (n.d) Operational Audits 101: Processes, Examples, and Checklists. Retrieve October 15, 2021, from https://www.smartsheet.com/operational-audit-process
Murdock, H. (2017). Operational auditing: Principles and techniques for a changing world. Taylor and Francis Group, LLC. pp. 36-61
As business advances and continues to progress, the need for competent auditors also increases. It is imperative that auditors provide assurance that the business is still in compliance and in line with their overall goal. Many businesses today have their own audit team or are hiring external auditors that could help them to optimize their organization's efficiency. Organizations could reduce operational costs and evaluate the reasons behind delays, waste, poor customer service, and excessive turnover time of processes. Through operational audit, management can make changes and take corrective actions to ensure that the organization will operate effectively and efficiently. Operation audit may be done by external or internal auditors. Either way, auditing has different phases, and most commonly it is planning, execution, reporting, and follow-up. Among these phases, which are all important, the two phases that should never be taken for granted are planning and execution. In auditing, the saying, "If you fail to plan, you plan to fail. Success doesn’t happen by chance or by accident. It takes a well planed audit to achieve the goal of the team. In planning, the team gathers all the necessary data and sets the scope of the audit. They identify the areas that need more attention and prioritize those that are exposed to high risk, so they can deal with them in a timely manner. Also, they allocate their time and resources and plan to properly execute the audit. This is a highly important phase as this will direct the whole audit team. Execution follows planning as a phase that should never be taken for granted. In this execution phase, most of the testing is performed. This is where the team interviews, documents, and applies methodologies to processes. They assess the operation and verify whether the procedures applied can still help the organization achieve its goal.
ReplyDeleteMoreover, different businesses or organizations require different audit engagements. And if I am given a chance to audit, I would like to audit the Philippines Health Insurance Corporation. Though it’s a tax-exempted, government-owned and controlled corporation, I would like to know if they are still in compliance with the mandate of the law, and are still providing for the needs of the people. The various issues with PhilHealt, such as allegations of fraud, mismanagement of funds, and overpricing, are extremely concerning in this time of pandemic. The organization must be examined to make sure that there is no single cent that the people in post can put in their pocket. To do that, I will start with the checklist of procedures to make sure that the audit will be effective. Selecting and screening will come first. Choosing the right audit team will increase the likelihood that the audit will be a success. It will be followed by defining the audit plan and the scope, pulling reference documents, identifying administrative support, and researching operational procedures. Other than that, the evidence must be audited and validated as well. There is also compiling audit findings, sharing them and giving actionable actions. Submitting the report doesn’t end the audit process. It must also be followed-up to check if the management considers the team’s suggestions and if they are effective.
Reference:
Murdock, H. (2017). Operational Auditing: The Principles Techniques for a Changing World. CRC Press.
BUCAL, RINA P. (2019-102462)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDelete• Just like what I said in the previous discussion assignment there are 5 phases of operational audit and that are: Selection, Planning, Fieldwork, Reporting and Follow-Up. All of these phases are important but for me Selection and Planning. In selection phase, to establish an audit plan, a risk assessment is performed. This stage may necessitate the auditors reviewing key business documentation and past audit reports. This is the most important phase because this is start of everything for an auditor, finding right strategies for the company, observing and checking past audit reports and also during the preparation of the yearly audit plan, internal audit meets with leadership and management to examine risks and potential roadblocks to accomplishing objectives. Next is the planning phase, the auditor takes an attempt to determine what types of paperwork are required, collects papers from past audits, and obtains preliminary statements from parties involved. During the planning phase, the auditor also begins to design the scope of the audit and identify the audit's aim. In some non-sensitive circumstances, a letter is sent to the internal organization's auditing committee informing them of the impending audit.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
• I really want to audit the financial reports of SGV & Co. because it ranks first in the Philippines as the best accounting and auditing firm. It is also having good benefits that the employees experience.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
ReplyDelete• An audit checklist is a tool that includes all of the stages required to complete an audit procedure. Here is my checklist to ensure the audit is effective.
o Auditors must be chosen and screened. – Of course you need to find valuable and trustworthy auditors that will work on the financial paper.
o Define audit scope and plans. – They must know first the audit scope and plans because determines how thoroughly an audit is performed.
o Collect reference materials – As an auditor you need to find facts that supports your claims about the financial paper you are auditing.
o Determine administrative assistance. - Administrative Assistants plan meetings, create reports, arrange trips, connect with staff on a regular basis, and ensure that the company's operations operate smoothly.
o Investigate operational procedures. – This is a need to observed because this is where our problems may come.
o Gather statistical evidence ¬– Just like what I’ve you need to have evidence for your claims.
o Evidence from all sources was audited – Assure that all your evidences are factual.
o Examine the evidence – Examine if the evidence is useful in determining what is the problem.
o Gather audit findings - The information you gather about processes connected to the operations of a certain department inside your organization is referred to as audit evidence.
o Distribute audit findings
o Give practical suggestions.
o Concerns and inquiries should be followed up on.
References:
• Buleen, C. (2019, February 4). Phases of the Audit Process. Small Business - Chron.Com. Retrieved October 16, 2021, from https://smallbusiness.chron.com/phases-audit-process-15260.html
• Courtnell, J. (2020, February 20). Audit Process: 5 Expert Steps for You to Get Your Audit Right | Process Street | Checklist, Workflow and SOP Software. Process Street. Retrieved October 16, 2021, from https://www.process.st/audit-process/
• Office of Internal Audit. (n.d.). Audit Process | The. Retrieved October 16, 2021, from https://internalaudit.uoregon.edu/report/audit-process#:%7E:text=corrective%20action%20plans.-,Selection,potential%20impediments%20to%20meeting%20objectives.
• What Is an Operational Audit? (n.d.). GoCardless. Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteIn the field of operational auditing, the audit phases play an important role in the organization since they help to understand what are the schemes and operations that are required for pro gress and changes in organizational behavior. Audit procedures are the precise steps taken by audi tors during the period of the audit to meticulously prepare and execute the audit.
Of all the phases of the Operational Audit, the planning phase and fieldwork phase are the two that I suppose are the most fundamental and should never be overlooked. It is useful in the planning phase because it aids the auditor in determining which parts of the audit process require immediate a ttention. Similarly, Audit Planning is becoming an increasingly vital activity because it assists auditors in identifying concerns and high-risk aspects in a timely manner.
This can also help them resolve these problems quickly and guarantee that auditors are able to establish t he scope of the overall audit that is scheduled to be undertaken. Furthermore, the execution phase is important because it gathers information about the process to be audited, evaluates documents, and processes internal co ntrols. Interviewing client staff members to create and undertake extensive testing and analysis in order to satisfy audit objectives for completeness and correctness is also part of the job.
In addition, the execution or fieldwork phase is paramount since it focuses one's emphasis on transactions testing, which involves determining the transactions accuracy and propriety. The auditor assesses whether the controls identified during the previous assessment are operating effectively and in the way stated by the client during this step. Furthermore, the fieldwork phase ends with a variety of key findings from which the auditor report.
DELAMBACA, VICENTE JR T. (2019-106640)
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
ReplyDeleteThe company that I want to audit is the SM Investments Corporation (SMIC). We all know that they are a leading Philippine company that is invested in market leading businesses in retail, banking and property. With this, SMIC tends to capture the high growth opportunities in the emerging Philippine economy.
With the exception of, I ought to audit the SM Investments Company because it is one of the foremost group that I want to work and to be part of. On the contrary, it seems me arduous to scrutinize due its wide range aspects but somehow it is reviting because I want to challenge and strengthen myself to grow as an aspiring professional auditor. Moreover, I want to probe SM Investments Company beacuse it looks for the market leaders or those with potential to become leaders in their chosen sectors that offer synergies and attractive returns and cashflows and capturing high growth opportunities in emerging Philippine economy.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures.
The SM Investments Company is the company I've chosen to audit , and I'll present an operational audit checklist of procedures. To begin with, I will undertake the planning phase, which will include developing a flexible annual audit plan that focuses on a suitable risk based methodology and determining internal audit priorities. Then it should be put into action according to the authenticated annual audit plan.
In addition, in this method, I will oversee the execution phase, which aims at enhancing a team of Professional audit employees with appropriate and relevant knowledge, skills, experience and specializations to achieve the objectives. Following that, I'll do a corrective and preventative phase beacuse it's fundamental to understand and distinguish kn a timely manner in order to determine the adequacy, effectiveness and timeliness of management activities in response to the audit observations, findings and agreed upon suggestions.
References :
Kong Sinra (2011). Why Audit Planning Is So Important? https://www.wikiaccounting.com/importance-audit-planning
Chicago State University (2021). Audit Process https://www.csu.edu/internalaudit/auditprocess.htm
Chrissie Dela Paz (June 28, 2017). Fast Fact: SM Investments Corporation https://www.rappler.com/business/fast-facts-sm-investments-corporation-henry-sy-malls
DELAMBACA, VICENTE JR T. (2019-106640)
1. Out of all the phases of auditing, I think the two phases that would never be taken for granted are Planning and Executing phase. Of course, all phase are important but these two are the most critical and should be look into carefully. Planning is the most fundamental managerial job, and it entails deciding ahead of time what needs to be done, when it needs to be done, how it should be done, and who will do it. It is an intellectual process that establishes an organization's objectives and determines potential courses of action for achieving those objectives. It lays strategy step-by-step instructions for achieving a specific goal. Planning may not be the most exciting phase of auditing, but it is the most important aspect for lowering risk and failure rates. Risks are always present in business this is why we need to properly create a plan where we can foresee it and make an immediate action. What may appear to be a modest danger to a task may later prove to be a more serious threat during project execution. With proper planning, teams can guarantee that risks are avoided and that minor activities are rolled up into milestones that align with the project's bigger goals, decreasing possible hazards. Whereas, executing is where you will do all the works related to your plan. In this stage you can know the outcome whether it is a good one or a bad one. You need to properly execute your plans because one mistake could lead your plans into waste. This is why you need to share information regularly in your team to improve communication and refine your plans during the execution. This phase will help you manage time, cost and risks.
ReplyDelete2. If I were to choose a company that I would like to audit, I would like to choose Jollibee Food Corporation. As a kid, it’s always been my favourite fast food chain and as I grow up it’s my go-to-food whenever I ‘m sad and hungry, of course. Since I was in the accounting field and if O were given the chance to continue this profession I would like to audit my favourite fast food chain. Also, I want to know if they are preparing their financial statements with honesty and integrity.
3. If I were to audit the JFC, the operational audit checklist of procedures that I would like to implement to ensure the effectiveness of the audit is the plan, do, audit and check. And in those checklist integrity, fair presentation, due professional care, confidentiality, independence, and evidence-based approach should always be present. Integrity is vital because this is the most important in this that helps the decision makers to make appropriate judgements. Fair presentation would help the effectiveness of the audit because it means you did not omit or change any information in the presentation. Audit must be done with the care of the professionals because it is not just any job. It must be done by professionals who have proper knowledge about the matter. It must be confidential because all information in the audit report is important and should not be leaked. It should also contain independence because in auditing you do not always rely in others. Your mind should not be corrupted by others. Most importantly, your audit report must be always be provided by evidence. It should always be backed up based in facts and accurate information for the audit to be effective.
References: S, S. (2019, July 12). What is Planning? definition, characteristics, steps and importance. Business Jargons. https://businessjargons.com/planning.html
QVALON. QVALON - Mobile workplace for retail chains. https://qvalon.com/blog/operational-audit-overview-definition-process-and-purposes/
ERIKA Y. MAGTIBAY
CBET-01-503A
2019-105480
1. Of all the phases of operational audit, list at least two phases that you think are very important and should never be taken for granted.
ReplyDeleteAll phases of operational audit—planning, fieldwork, reporting, and follow-up—provide a simple and effected approach to organize, perform, and communicate the results of the work done. One of the most crucial parts of auditing process is the beginning cycle, the planning. This stage is necessary to outline details that need to be done or resolve by the company. In this phase, you are initially clueless because you are just about to determine the factors that require focus of corrective actions. A series of what, why, where, who, and when questions are usually formulated in this process. What activities have potential to high risk? Where is the process or system vulnerable? Why the current operation is a failure? What must go right for us to succeed? You begin to plan when you start giving multiple answers to these series of inquiries because these are used to highlight important information and served as basis to assort collected data from most to least important. By identifying the priorities, this will help them to define how the company should allocate their available resources.
Another important process is reporting because this is where auditors communicate what they discovered as a result of the performance of audit procedures. In this phase, they develop recommendations for corrective actions. Auditors discuss the alternatives and provides for a satisfactory solution to the issue.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
As one of the largest companies in the country, I would like to audit San Miguel Corporation. It is fascinating how diverse this corporation is for they operate beverages, foods, fuel and oil, infrastructure, telecommunications businesses and many more. As I research about this company, I have found that they are incorporated in 1913 and I am astonished because centuries passed but they are still relevant and successful. If I become an auditor someday, I am curious to know the secret of their continuous success. I hope I would be given an opportunity to learn their policies, rules and regulations.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
A simple and most commonly used procedure to the effectiveness of audit is Deming’s Model Plan-Do-Check-Act (PCDA). It is a method used for the control and improvement of processes. First step is to plan by establishing objectives and processes. This is where you define the requirements, objectives, expectations, and approach to deliver results according to the expected outcome and outputs. Look for problems that may affect the operations of the company. Second, do or implement the plan. Gather data of the progress made and evaluate any issues along the way. Third, check the results gathered in the do phase and compare them with the expected goals or results from the plan phase. The gap of these two results will determine if improvements were actually made. The results of improvements will influence the last phase, act. Lastly, the act phase enacts new standards. Practice and repeat the cycle to achieve the objectives of the auditing.
References:
Murdock, H. (2017). Operational Audit: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC. pp 36-248.
PSE Edge. (n.d.) San Miguel Corporation. Retrieved October 16, 2021 from https://edge.pse.com.ph/companyInformation/form.do?cmpy_id=154&fbclid=IwAR172N5I214vbwCY8bnBvu3hwVRjblgHt6C-_YxpCwAxyWEebhE1dXtu8Co
-JANA U. LOREÑO (2019-101799)
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ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
There are four critical phases in auditing: Planning, Fieldwork, Reporting, and Follow-Up (Murdock, 2017). These phases are crucial for having successful and efficient operations that can benefit any business. Planning and reporting are two steps that I believe are quite significant. First and foremost, planning is the first step in the auditing process. Planning is, without a doubt, the most crucial aspect of an audit. According to Murdock, "Failing to plan is preparing to fail." Not only in auditing that planning plays an important role, but in Engineering work, architectural design, and even in our lives, planning is very significant, and these phases should not be avoided. In auditing, planning is a crucial aspect of auditing. It includes scoping, funding, selecting the target population, determining how testing will be undertaken, and publicizing the audit.
The second important phase I chose is reporting. We all know that the essence of auditing at the end is to communicate the results or findings. Here the outcomes will be communicated during the reporting process. It includes disseminating the review's findings, ideas, and best practices and taking corrective action suggestions. It is critical since it is here that issues about how to achieve an effective result will arise. In the end, what did the auditor discover? We will be informed if there is an effect or an impact on the company. Give some suggestions for correcting the situation so that the performance meets the criteria.
The planning and reporting phases are the two most important auditing phases, and I think we should never take them for granted.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I could have the opportunity to audit one firm in the Philippines, it would be SM Prime Holdings, Inc. (SMPH). One of Southeast Asia's most integrated property developers creates creative and sustainable lifestyle cities by constructing malls, apartments, workplaces, hotels, and conference facilities. In terms of assets, it is also the Philippines' largest firm. I'd like to learn more about this rapidly expanding and prominent organization in our country. I'd like to learn firsthand how they manage their business on a shoestring budget till they become one of our country's top developers.
- MANABAT, GHENALYN A. (2019-103679) -
2/2
ReplyDelete3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
SM Prime Holdings, Inc. founded in 1994 in the Philippines. They began as a mall developer and operator and have grown to become the Philippines' largest retail shopping center developer and operator. As a reason for it to be audited properly, a complicated operational audit technique is required. GoCardless provides a checklist of operational audit methods, and it comprises the following: Select and screen auditors, establish audit strategies and scope, assemble reference papers, and so forth. Identify administrative assistance, do studies on operational methods, and so forth. Assemble statistical evidence Examine evidence from all possible sources. Examine the evidence, compile the audit results, Share audit findings, offer practical recommendations, and respond to queries and concerns. Following all these checklists can ensure that an audit is effective.
References
Grabillo, M. (2021). Operational Audit: What Are Its Phases. Retrieved October 16, 2021, fromhttps://markgrabillo.blogspot.com/2021/10/operational-audit-wh
at-are-its-phases.html
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Retrieved October 16, 2021, from, Taylor & Francis group.
SM Prime Holdings. (2021). Corporate Profile. Retrieved October 16, 2021, from, https://www.smprime.com/corporate-profile
Accountants GoCardless (n.d.). Operational audit checklist. Retrieved October 16, 2021, from, https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#opera
Tional-audit-checklist
- MANABAT, GHENALYN A. (2019-103679) -
(1/2)
ReplyDeleteAn operational audit refers to the process of evaluating a company's operating activities – both on a day-to-day level and a broader scale (Wandering CPA, 2021). To conduct such a review different businesses follow different patterns of operations audit but most of these patterns revolve around the four major phases namely: planning; fieldwork; reporting; and feedback. Given that, the scrutiny and demeanor of these phases still depend on the specific are the business is involved and the type of entity being audited. Moreover, to ensure that the auditing process being conducted is effective and efficient, entities tend to provide an operational audit checklist of procedures.
The phases of the auditing are structured in the traditional planning, fieldwork, and reporting phases (Murdock, 2016). To say that there will be only at least two very important phases is an understatement. Every phase is very crucial in conducting the auditing process and these phases have their part to fulfill in the process so it should not be taken for granted by the auditing team. First, planning is a crucial part as it gives the starting point of the whole operational audit. As the proverbs go— failing to plan is planning to fail, the planning phase is the framework of the whole audit process, and therefore, all the aspects of the auditing process are laid here before going to the next step. The planning phase should not be taken for granted as the beginning is the foundation for the whole process and its success depends on how strong the beginning is. Second, the fieldwork phase is important for it is the application of the plan, the crucial point of implementing what is constructed at the beginning, and making sure that everything follows in accordance to generate a more reasonable conclusion. The fieldwork phase is never to be taken lightly for it was prone to complications as actions are more subjective to the people than gathering data. Also, a single fall-out in the fieldwork can cause a huge disaster in the whole process. Lastly, the reporting phase is where all the audited information is presented to the top management, and this is also where the improvements from the top management will be given supported by concrete evidence. This phase should not be taken for granted as the finalization is an essential phase in completing the whole process. The beginning may not justify the end but the end will give credibility to the beginning and middle part of the process.
The manner of the auditing process in businesses depends on what type of business they are. If I were to choose a company that I would like to conduct an operations audit, it would be Jollibee Food Corporation. Since I was a child, I’ve been a huge fan of their products, the corporation made its name through their signature of valuing the family as the common tradition in the Philippines and I think that is the wings that made the corporation fly through success. Also, I’m curious, given that it’s a huge corporation now with their fast-food chain, not only has branches in the Philippines but also, in other countries, how they make sure not to miss every little detail in their day-to-day and overall operations, how they develop long-term strategies given that there’s always a change in trends in the industry, what measures they make as precautions in the risks they are exposed to, and what is their key in further development of the business. I think it would be a great opportunity to learn and analyze the operations of a business that started from a small food chain to an international fast-food chain.
Talabong, Ela Rain F. (2019-102788)
CBET-01-502A
(2/2)
ReplyDeleteWhen done correctly, audits will have profound business benefits (Courtnell, 2020). To ensure that the audit procedures are effective and efficient entities provide checklists to keep up with these procedures. Given the business that I want to audit is the Jollibee Food Corporation, when making a checklist about it, I think it’s important to consider all the factors affecting the business and its auditing process. The first in the checklist will be the quality management system as the processes of an entity is important and given that the quality of the products and services of the entity should always be the top priority. Second, will be the quality of the people within the entity. Third, the efficiency of the corporation to generate profits. Fourth, the strategies and precautions taken and planned by the corporation when it comes to business risks and opportunities. The fifth will be the compliance needed to be done by the corporation to continue its business. The sixth will be the overall interactions within the process in the corporation as well as the interactions within departments to departments to ensure harmonious day-to-day operations. Seventh, the business’ connection to outside parties. Lastly, the review for the overall auditing process until the feedback phase if everything’s in accordance to the plan.
Every phase of operational auditing is equally important and none should be taken for granted. To compare it in real life, I think of it as the three branches of the government where they have equal importance and they have to harmoniously function for a country but, in this process, for a business to move towards a promising future. Moreover, different types of businesses have a variety of auditing processes and to ensure that everything is aligned for the promising future of the business there should also be a checklist where they will ensure the effectiveness and efficiency of the procedures.
References:
Courtnell, J. (2020). Audit Process: 5 Expert Steps for You to Get Your Audit Right | Process Street | Checklist, Workflow and SOP Software. Process Street. https://www.process.st/audit-process/
Murdock, H. (2016). Operational Auditing: Principles and Techniques for a Changing World (1st ed.). Auerbach Publications. https://doi.org/10.1201/9781315368733
Teacher Jennie. (2021). Auditing: OBJECTIVES & PHASES OF OPERATIONAL AUDITS 09112021 by MJBC. www.youtube.com. https://www.youtube.com/watch?v=7aUabD77FvI
Wandering CPA. (2021). OPERATIONAL AUDIT: WHAT ARE ITS PHASES? Markgrabillo.blogspot.com. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Talabong, Ela Rain F. (2019-102788)
CBET-01-502A
BANGATE, LOVELY V.
ReplyDeleteCBET 01-501A
1. After reading the book of Hernan Murdock with the title “Operational Auditing,” it came to my senses that each phase of operational audit has equal importance and should be taken seriously since they are all requisites to make a successful audit report. I have found out that the planning phase serves as a guideline to an auditor on how and when to perform the entire procedure. This also includes the risk assessment to formulate an appropriate plan so, this stage needs caution and critical analysis of available documents. Moving to the fieldwork stage, this audit activity needs intensive scrutinization of the operational management program, internal control, business operation, risk management, and so on. The exercise of Professional skepticism is strictly observed during testing, evaluation, and review to the client’s firm to warrant the attainment of the company’s objectives. Next in line is the reporting phase which all the documented findings are communicated to the stakeholders and a collaborative discussion is held to design response strategies. This phase should never be taken for granted as it can impair the judgment of management which can negatively impact the overall condition of the company. Lastly, the follow-up phase is where the auditor verifies if the corrective action has been implemented and evaluates its effectiveness to eradicate the root cause of the issue. If anyone in these phases has been failed to perform with due care, then it is impossible to support the goal of its client.
2. I would like to audit the PLDT company because I’m a PLDT user too and I want to improve the services they are providing to their subscribers. During this health crisis, the internet and gadgets became essential tools in attending school and work thus, internet disruption during the sessions stresses the users. Most of their customer claimed that this is the worst internet provider because they struggled with frequent unstable internet connections. Moreover, there are numerous reports of troubles such as lack of customer and technical service, too pricey plans, and laggard system which the company failed to address until now. Due to these issues, other users are unsatisfied with the company’s performance and shift to other competitors. If this kind of unfavorable situation persists, the company will probably be left behind and forced to exit the market in the future. Assuming I’m an effective operational auditor at the moment, I can help them assess the operations’ shortcomings, oversee the management program, and suggest stringent policies and regulations among the employees to ensure their duties and responsibilities are well-performed. Furthermore, I am capable of strengthening their internal control, improving risk management plans against business threats, and encourage them to become innovative to leverage opportunities. Once the root cause of the problems has been eradicated, I can consider it as a great achievement on my part since I have contributed to the success of my client and help the consumer have a quality service experience as well.
BANGATE, LOVELY V.
ReplyDeleteCBET 01-501A
3.Upon reading various reference sites, I have selected the most appropriate operational audit checklist of procedures which comprises the following steps: Select and screen auditors, Define audit plans and scope, Gather reference documents, Identify administrative and infrastructure support, Research operational procedures, Collect evidence, Audit evidence from all sources, Evaluate evidence, Compile audit findings, Share audit conclusions, Give actionable advice, Follow up with questions and concerns, and finally, Follow up audit. These whole procedures are the breakdown of the four audit phases presented by Murdock. These procedures help to assess the effectiveness of the entire audit process.
References:
Murdock, H. (2017). Operational auditing: Principles and techniques for a changing world. Taylor and Francis Group, LLC. pp. 36-61
Eby, K. (2017). Operational audits 101: processes, examples, and checklists. Retrieved October 16, 2021 from https://www.smartsheet.com/operational-audit-process
1. Of all the phases of Operational Audit, list at least 2 phases that you think are very important and should never be taken for granted.
ReplyDelete-In our daily lives, we are bound to progress and process things step by step. A process is a series of stages where the last stage is the end result or goal you wanted to achieve. It is important to define things by what work is to be done, how it is performed, what is the purpose of doing it, and who is responsible for the procedure. Through standard procedures, there is more predictability and can help to further improve and detect things that needs change. As per Murdock (2019, p.33), there are four phases of Operational Auditing, namely, Planning, Fieldwork, Reporting, and Follow-Up. It provides the systematic plan to an efficient and effective approach by communicating the results. It all starts with Planning, which serves as the foundation of every business venture. As the famous quotation goes, “Failing to Plan is Planning to Fail”. It states that in order to succeed, we must always provide and build a concrete and coherent plan. Behind every successful business is a well developed, organized, and transparent planning team. I think Planning Phase is one of the most vital and crucial stage of every businesses. It is important to plan and visualize every work to be done in an entity. In that way, it will help the business to set an eye to their goals, aspirations, and visions. Another benefit of good planning is it will save time, money, and energy. Bad planning can cost you more than just money. It is important to identify and eliminate wrongdoings from the very beginning. Planning is viewed as blueprint that will guide the whole process and development of an entity. Also, through proper planning, it helps to focus on achieving the optimal results rather than finishing the audit for compliance purposes only. Another important phase is Fieldwork. It is defined as the phase where the assessment of internal controls and compliance happens. (University of Texas, 2021). In this part, the team communicates the observations, potential risk and recommendations to the management and clients. It is important to identify and eliminate the root cause of the problems. I think the first two phases is important since it serves as a foundation for the whole journey of the business. Any problems or deviations must be taken into account and apply corrective actions as early as possible.
-Kianna Erika D. Zarain CBET-01-502A 2019-104924
ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited, choose atleast one company in the Philippines you would like to audit and why?
-Based on the latest CoA report, Pag- IBIG Fund gets the highest audit rating. I will choose this government agency or company to audit because of its unmodified and unqualified audit opinions. The agency also deployed programs to aid in the recovery of the Philippine economy through a stimulus in the housing industry.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure audit is effective.
• Planning
a. The following questions must be approved first before fieldwork:
• Why was the audit project approved to be on the internal audit plan?
• How does the process support the organization in achieving its goals and objectives?
b. Outline key process steps
c. Validate drafts
d. Create an initial pre-planning questionnaire
• Fieldwork
a. Assessing the adequacy of internal controls and compliance
b. Testing of transactions, records, and resources, and
c. Performing other procedures necessary to accomplish the objectives of the audit.
• Reporting
a. Identifies potential control weaknesses, violations, and risks
b. The auditor will discuss any observations with management in order to ensure that any identified issue and associated risks are fully understood and to obtain agreement on proposed recommendations
c. The results of the audit, once confirmed, are communicated in the audit report.
• Follow-up
a. Audit survey
b. Follow up audits
References:
Gartland, D. J (2017). The importance of audit planning. Retrieved from https://www.journalofaccountancy.com/issues/2017/sep/importance-of-audit-planning.html
Murdock, H. (2017). Operational auditing: Principles and techniques for a changing world. Taylor and Francis Group, LLC
University of Texas (2021). Audit Process. Retrieved from https://audit.utexas.edu/audit-process
-Kianna Erika D. Zarain CBET-01-502A 2019-104924
2 PHASES OF AUDITING THAT SHOULD NEVER BE TAKEN FOR GRANTED
ReplyDeleteIn the conduct of operations audit, the standard process being followed by auditors regardless of the type of audit they perform includes planning, fieldwork, reporting, and follow-up. The proper undertaking of these audit phases leads to higher chances of getting the most accurate results auditors may get. And while it is true that every phases substantially contributes to the quality of the overall audit findings, I believe that both the planning and fieldwork phases shall be taken extra seriously and never be subject to negligence and mediocre efforts.
Like an architect preparing for a project's blueprint before an engineer build it into life, auditors also design an audit plan that will serve as their guide and direction for the following audit-related activities to be carried out. This is to make sure that everything will go smoothly in order, objectives are firmly defined, no hindrances along the process, and without possibilities of the audit work being halted as it commence. This phase is extremely important because one cannot go into the main work empty-handed. Imagine an auditor still figuring out what next to do, repeating over and over previous activities because she missed some details, failing to deliver crucial information to clients, the audit process will be a total mess, and of course, audit findings are compromised.
But above all, the phase that should never be taken for granted is the fieldwork, because aside from being the lengthiest and most energy-absorbing phase in auditing, this is where bulks of most significant information regarding the business operation will be extracted and obtained. And remember, it's with these information that an auditor will base her professional judgements and realistic opinions. Additionally, an auditor cannot afford to repeat the long process as it will incur more not just monetary support, but also time and effort coming from all the internal stakeholders. It is also unpleasant for the management to extend the operational freezes caused by the conduct of auditing. Therefore, auditors cannot stay complacent during the fieldwork phase.
IDEAL COMPANY TO PERFORM AUDITING
ReplyDeletePersonally, it's really a big deal when a company is just operating solely for profit, like those which do not care if they are harming their customers, the environment, and the society, or providing less quality products or services that are very contradicting with their advertisements. As long as they could gain something at others' expense, they would still persist. So if I will be auditing a particular company, it shall be the one which truly values nature and people, or is genuinely engaged in corporate social responsibilities.
So I've searched through the internet, and found one of the many sustainability-pursuing firms that I would gladly offer my service to. The company name is 'The Healthy Row Enterprise' which was founded by Miss Roanna, a Functional Medicine Certified Health Coach (FMCHC) and an Integrative Nutrition Health Coach (INHC). Under them was the creation of multichannel stores, namely, the Humble Market and Seed of Life PH, that provide businesses and consumers natural and sustainable living essentials. They are overall concentrated to the areas of food and nutrition, sustainability, functional medicine coaching, and holistic wellness. And for me, they deserve to bloom and remain in their industry having that mission in mind by making long-term operational improvements that they could get from having an auditor in their company to perform auditing.
Here's the checklist of operational audit procedures that I will provide for audit's effectiveness:
Planning
• familiarizing the company's operation
• objectives shall be established
• scopes shall be defined
• activity timeframes shall be generated
• risks shall be reviewed and ranked according to their materiality
• strengths shall be noted
• collection of all the necessary documents
• meeting with the owners for the audit plan modification and approval
Fieldwork
• Interviewing
• work assessments by observation
• applying of testing methodologies
• documentation
• status updates
Reporting
• evaluation of gathered information
• making of summaries and conclusions
• formulation of possible advices, suggestions, and recommendations
Follow-up
• confirm if corrective actions are carried out
• check the adequacy, effectiveness, and timeliness of these actions
References:
Jeann. (2021). Objectives and Phases of Operational Auditing. Accessed October 16, 2021 https://youtu.be/7aUabD77FvI
-Ellen Grace B. Tanhueco (2019-100741)
The audit process is divided into five stages: selection, planning, execution, reporting, and follow-up. All of these phases, in my opinion, are critical to completing the audit engagement, meeting an organization's standards, and producing the best results. However, if I had to pick only two stages that I believe are more essential, they would be the planning and execution phases. First, during the planning phase, the internal audit team gathers pertinent background information and contacts the customer. Auditors engage with university administration and clients to identify risks, establish audit goals and scope, and schedule fieldwork and report dissemination. Adequate preparation allows the auditor to organize the engagement, including choosing appropriately qualified team members to deal with specific risks effectively and efficiently. Then comes the execution phase, in which, as soon as the audit is scheduled, workers from the internal audit department do the fieldwork. Clients are kept informed about the audit process through status meetings. The auditor consults with the customer as soon as audit observations, possible results, and suggestions are detected. The audit engagement's execution phase is a high-activity time. Managing teams, evaluating information, carrying out testing, making decisions, documenting work, and communicating with clients are all part of the job. During peak seasons, efficient audit execution is essential to customer satisfaction, profitability, and staff morale.
ReplyDeleteIf given the opportunity, I would want to audit at SM Corporation. SM Corporation is one of the Philippines' top ten most prominent corporations. Mr. Henry Sy's establishment of the firm astounded me. He transformed ShoeMart (SM), a small shoe business in Carriedo, into a department store. Today, it employs a vast number of people and even offers student scholarships.
An audit checklist is a tool that includes all of the procedures required to complete an audit procedure. To guarantee that I perform well in my selected firm, I will use Kandarpa's checklist tool. The first step is to develop objectives based on management goals and priorities. Step two is to create an auditing program. Step three is to keep an eye on the auditing program. Step four is to examine and enhance the auditing program and determine whether the objectives were met.
John Curran, The University of Kansas, Internal Audit, Time retrieved 10:11PM https://internalaudit.ku.edu/project-process
Jane Courtnell (2020), Operational Audit: Best Practices Used by Expert, Time retrieved 10:33
https://process.st/operational-audit/#operational_audit_integration Time retrieved 10:33PM
PATRICIA LYNN GUAMOS 2019-103828
I think the two phases that is important and should never be taken for granted are planning and fieldwork. Based on the book that I have read, planning is the most important because it analyzes the business’ operation and make decisions and plans on improving the policies and procedures of the business to be more efficient and effective. During the planning process, the internal audit team will define the scope and objectives, review guidance relevant to audit (e.g., laws, regulations, industry standards, company policies and procedures, etc.), review the results from previous audits, set a timeline and budget for the audit, create an audit plan to be executed, identify the process owners to involve, and schedule a kick-off meeting to commence the audit (Clarke, 2018). Also, as the saying goes by “Failing to plan is planning to fail”. If there is no plan, there is also no improvement in the business. In this such modern world, improvement is very vital in adapting every changes that is happening around. More than mere words, experienced auditors know that poor planning leads to inefficient auditing practices as testing activities that can be combined or strategized, are instead done one at a time; selecting and reviewing transactions together is instead done as multiple steps, and rework is common as procedures are poorly initiated only to be rearranged and additional information examined later. Lastly, it also results in poor scheduling of meetings with process owners and other stakeholders (Murdock, 2017). Fieldwork is the second most important in the phases of auditing because planning will be in vain if there is no execution. By executing the plans, auditors will know whether it is effective or not. Throughout this phase, the audit team will execute the audit plan. This usually includes interviewing key personnel to confirm an understanding of the process and controls, reviewing relevant documents and artifacts for an example execution of the controls, testing the controls for a sample over a period of time, documenting the work performed, and identifying exceptions and recommendations (Clarke, 2018). It also assess if the plan meets its goal and objective, and does the plan performs effectively as what it is designed. The company that I would like to audit is J&T Express because I want to understand the operation of their business, what is their procedures and policies when it comes to delivering the parcel and how they manage to deliver so much parcel very fast and/or on time. When it comes to providing a checklist of procedure ensure the audit is effective, I will follow the given framework of Eby (2017). In the framework, each part of the checklist will likely need to be broken down into separate activities - plan, do, check, and act - based on the size and scope of your particular operational audit. First is plan, under this are the selection of competent auditor, screening of auditees, defining auditing plans and procedures, and defining purpose and scope. Next is the do, under this are the reference documents, identifying administrative and infrastructure support, collecting information and audit the evidence. The third one is check wherein it evaluates against criteria, audit findings, and review finding. Lastly is the act which includes the presenting of report with conclusions and actionable information, follow-up to answer questions or concerns, and follow-up audit.
ReplyDeleteReference:
Clarke, I. (2018). What is an Internal Audit? Answers to Common Questions. Retrieved October 14, 2021 from https://linfordco.com/blog/what-is-internal-audit/
Eby, K. (2017). Operational Audits 101: Processes, Examples, and Checklists. Retrieved October 16, 2021 from https://www.smartsheet.com/operational-audit-process
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World.
Taylor & Francis group, LLC.
- Maria Eloisa A. Ramos (2019-101335)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteOperational Audit is the process which evaluates the operations of the entity. Grabillo (2021) stated that “there are Five (5) Audit Phases which are Selection Phase, Planning Phase, Execution Phase, Reporting Phase, and the Follow up Phase”. These phases are important to have a relevant and reliable evaluation to an organization. From my point of view, the two phases that is very important and should never be taken for granted are Planning Phase and Reporting Phase.
The organization or a client should work towards a desired goal or objective, but how we will achieve these goals? That is what planning is about. According to the Lutz Business Insights (n.d.), Planning Phase gather information like Understanding the Entity, its Environment, Internal Controls, the Auditing Strategy etc. In this phase it is very time consuming and requires a full attention from the management. This phase auditors and staff members, need to identify the risks and how they will handle it and reduce its impact. In this phase it is important because it helps to set the right goals, it also provides a set objective and a standard for controlling. In addition, in this phase, it eliminates overlapping of Wasteful Activities in order to use the limited resource in an effective and efficient manner. if the planning phase of an audit is completed thoroughly, it will most likely result in gained efficiencies, less time, and less money for both audit staff members and client.
An accurate and unbiased financial reporting is the tool to see if the company is still leading to its goal. As an accountant or auditor, the financial statement is the most important output that we will produce. In the Reporting Phase, the documents and data are already done, the final audit report is also done and there is an evaluation of audit performance. This phase is crucial for the auditors because the financial audit report needs to address in the client in a sense that he will understand and make a reasonable decision. It should never be taken for granted because in this phase, the client will give signal if the he will follow the action plan or not.
2. Choose at least one (1) company in the Philippines you would like to audit and why?
If I will have a chance to audit a company here in the Philippines, it will probably Shopee. Since the start of pandemic, online businesses surged in the business world and Shopee is one of the popular e-commerce businesses here. For me, the idea of this business is helpful, not only to the Filipinos who are stuck in their home during quarantine, but also for the business owners that needs to generate income even there’s a new policies or restrictions. As an aspirant auditor, I’m interested to know what are their policies, procedures, and systems that helps them to be in this success. Auditing Shopee will be a big challenged since the business is well known, so expected that there will be a lot of pressure, since as an auditor, we are expected to give transparency and integrity in auditing the business. In spite of pressure and attention from public, I believe that I will do my task with full of integrity and feel excited to audit this successful business.
(page 1/2)
-OMPAD, Me-An Joy A. 2019-104916
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
ReplyDeleteThe business needs to conduct an internal process audit to ensure that the organization is still doing good in a sense that the resources used in effective and efficient way. As an auditor, it is important to have audit checklist procedure we can’t skip any important step. In auditing the Shopee, I will us the general audit checklist procedure that provided by GoCardless (n.d.), which are the following:
a. Choose the appropriate auditors.
b. Identify and discuss the audit plans and scope.
c. Gather all the necessary documents or data that will help you for the evaluation.
d. Recognize the administrative support.
e. Analyze the operational procedures of the business.
f. Look into the statistical data.
g. Audit the necessary documents
h. Assess the evidence
i. Systematize the findings after auditing.
j. Communicate the conclusions
k. Suggest a recommendation for improvement.
l. Ask for any concern, clarifications, or questions.
REFERENCES:
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
GoCardless (n.d.). What is an Operational Audit? Retrieved October 8, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Why the Planning Phase of a Financial Statement Audit is Important . (n.d.). Retrieved from Lutz Business Insights: https://www.lutz.us/why-planning-phase-financial-statement-audit-important/
(page 2/2)
-OMPAD, Me-An Joy A. 2019-104916
ReplyDeleteHershey Mae D. Salutim (2019-106961)
PART 1
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
- I believe the planning stage and fieldwork, because I understand that each stage is critical in producing a satisfactory audit report for the client, but we also recognize that we cannot complete the entire phases and we cannot jump to the next phase without first completing the first part. The most crucial aspect of auditing is planning; bad preparation can result in ineffective auditing and waste of time, money, and effort. Planning is the stage in which you organize things, such as scheduling meetings with clients and persons of interest, determining how testing will be conducted, budgeting, and so on. If we eliminate this stage, we are planning to fail. (Murdock, 2017) As a result, it should not be taken for granted; planning should be thorough and detailed in order for the process to function smoothly and produce a high-quality audit report.
The fieldwork stage, where the plans are carried out, is the following stage that I believe is very significant to the auditing phases. This stage is where the actual audit work takes place; it entails testing the methods, scanning or inspecting the company's documents to see if they are accurate or if there are any errors or fraud, as well as interviewing the person of interest to obtain the data or information needed to prepare an audit report. In conclusion, all phases are important, but I believe the first two phases are more important in the auditing phases because what the auditor would report to their clients if not for the two phases, and if these phases are taken for granted, the report will not be reliable and may miss a problem that will cause a major problem for the company. In short, taking the first two phases for granted will jeopardize your work and your credibility as an auditor.
Hershey Mae D. Salutim (2019-106961)
ReplyDeletePART 2
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
- I'd like to audit San Miguel Corporation, one of the Philippines' major corporations. San Miguel Corporation presently has a highly integrated company structure, with investments in a variety of industries, including drinks, food, packaging, energy, fuel and oil, infrastructure, property development and leasing, cement, automobile distribution, and financial services. In addition, SMC generated 4% of the country's Gross Domestic Product (GDP). (San Miguel Corp, n,d.).
I choose the San Miguel Corporation because it is one of the firms in the Philippines that helps to expand the economy by generating jobs for Filipinos and also by assisting other sectors to grow, such as expressway projects that benefit agricultural and tourism. I also want this company to audit, so I can see if there is no fraud and if it is truly helping the Philippines thrive, rather than other companies invading taxes and misrepresenting information to take advantage of others.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
- Auditors must be chosen and screened.
- Define the scope and plans for the audit.
- Compile a list of references.
- Find administrative assistance.
- Investigate the operational procedures.
- Gather data
- Audit evidence from all sources
- Evaluate evidence
- Compile the results of the audit
- Discuss the findings of the audit.
- Give actionable advice
- Follow up with questions and concerns
(GoCardless, n,d.).
References
Murdock, H. (2016). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC. Pp 33-57.
GOCARDLESS. (n,d.). What is an operational audit?. Retrieved from Google. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
San Miguel Corporation. (n,d.). Our Company. Retrieved from Google. https://www.sanmiguel.com.ph/page/our-company
I have learned that operational audits consist of four phases: planning phase, fieldwork phase, reporting phase, and follow-up phase. The two phases that I think that are very important and should never take for granted are the planning phase and the field work phase. These two are essential because this is where the auditing phases begin and these are also the face or the foundation in the process of auditing. We need to understand this deeply for us to come up with reliable and faithful information. Firstly, the importance of audit planning primarily resides from ensuring that auditors can adequately identify the relevant risks associated with the audit process in order to strategize and use risk mitigation strategies because it is a way to plan their audit in such a way that they can concentrate on the most important areas first, and then move on to the less important areas later in the process. Second, and perhaps most importantly in audit phases, I believe is the field work phase because it is considered as an intense period of activity. It includes managing teams, analyzing data, conducting tests, making decisions, documenting work, and interacting with clients are all tasks that must be completed. Effective audit execution is critical to client satisfaction and profitability.
ReplyDeleteI do not have a wide range of ideas when it comes to choosing what firm to audit, where I apply my knowledge and skills for, however according to my research SyCip Gorres Velayo & Company (SGV) is the largest auditing firm in the Philippines which intrigues me and makes me want to audit this firm to train, develop and practice my career growth in accounting as a person and as a professional. According to one of the reviews in Working at SGV: Employee Reviews About Pay & Benefits (n.d.) this company has a good environment, security, and reputation, all of which I believe will help me broaden my auditing knowledge and understanding.
Checklists help to stay organized by providing detail for each step of a process (Why Is a Checklist Important?, n.d.). It can be used as a visual reminder, a method of prioritizing tasks, and a method of scheduling everything that must be done to avoid missing deadlines. My operational audit checklist of procedures to ensure that an effective and efficient audit is being followed would compose of audit questions, findings, evidence, results and opportunities for improvement (Keen, 2021). Audit questions include lists of clients' queries. Next is findings, this is the part where you can include the assessment of the risk whether it is negligible, low, moderate, severe, or catastrophic. Also, this is the part where we should analyze the problem that we need to address. Then, evidence, whether the set of documents are available and presented. And the results, if the results are well presented and problems are resolved. Lastly, an opportunity for improvement, this section includes and provides suggestions on how the process may improve in any way. These checklists serve as a point of reference before, during, and after the audit process.
References:
Keen, R. (2021, February 09). What is an Internal Audit Checklist? Internal Audit Checklist - Everything You Need to Know. Retrieved October 16, 2021, from https://www.iso-9001-checklist.co.uk/internal-audit-checklist.htm
Why is a Checklist Important? (n.d.). Retrieved October 16, 2021, from https://checkify.com/blog/why-is-a-checklist-important/#:~:text=Checklists%20provide%20detail%20for%20every,you%20complete%20all%20the%20steps.
Working at SGV: Employee Reviews about Pay & Benefits. (n.d.). indeed.com. Retrieved October 16, 2021, from https://www.indeed.com/cmp/Sgv/reviews?fcountry=ALL&ftopic=paybenefits#:~:text=SGV%20is%20the%20best%20firm,employee%20benefits%20are%20very%20low.
BATULAN, Anna Marie M. 2019-102079
Paglinawan, Eliazar A.
ReplyDeleteCBET-01-501A
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
I think the two most important phases that must not be easily overlooked are planning and fieldwork. I see planning as the framework that guides the audit so it should be accomplished with utmost effort and quality. Fieldwork is an audit phase that verifies if the tools and method are effective, efficient, and less likely to fail.
Scoping, funding, defining the demographic of interest, how testing will be done, and announcing the audit are all part of the planning process. Planning is, without a doubt, the most crucial aspect of an audit. Poor planning leads to inefficient auditing practices because testing activities that can be combined or strategized are instead done one at a time; selecting and reviewing transactions together is instead done in multiple steps; and rework is common because procedures are poorly initiated only to be rearranged and additional information examined later. Finally, it leads to a lack of planning for meetings with process owners and other stakeholders (Murdock 2017).
The significance of audit planning (ACCA, n.d.):
1. It allows the auditor to focus on the most important aspects of the audit.
2. It assists the auditor in quickly identifying and resolving any concerns.
3. This aids the auditor in appropriately organizing and managing the audit engagement so that it is completed in a timely and effective manner.
4. It aids in the selection of engagement team members with appropriate degrees of capability and ability to respond to potential risks, as well as the proper assignment of work to them.
5. It simplifies the management and direction of engagement team members, as well as the evaluation of their work.
6. This aids, if appropriate, in the coordination of expert activity.
Transaction testing and informal communication are the focus of the fieldwork. The auditor assesses whether the controls identified during the preliminary review are functioning effectively and, in the way, stated by the client during this phase. The fieldwork stage ends with a list of important findings from which the auditor will construct the audit report's final draft (Chicago State University, n.d.).
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I had to pick one company, I would choose Mang Inasal. I have no seriously particular reasons but they are making it overseas and I would like to help them succeed spreading all over the world to promote Philippine cuisine and delicacies and it would definitely help our country grow economically even by just an inch.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Checklist for operational audits
Here is a fast operational audit checklist of procedures to improve flow:
1. Choose and interview auditors
2. Define the scope and plans for the audit.
3. Gather your sources of information.
5. Research operational processes 4. Identify administrative support
6. Compile statistical data
7. Examine evidence from all possible sources.
8. Assess the evidence
9. Compile the results of the audit
10. Disseminate audit findings
11. Provide practical guidance
12. Follow up on any questions or issues you may have.
References:
ACCA. (n.d.). Audit Planning. Retrieved October 16, 2021 from
https://whitecollaraccountant.com/audit-planning/.
Chicago State University. (n.d.). Audit Process. Retrieved October 16, 2021 from
https://www.csu.edu/internalaudit/auditprocess.htm.
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing
World. Taylor & Francis Group, LLC.
Velasco, Mely Jane
ReplyDeleteCBET01-502A
1. All the phases of auditing have the same level of importance and each one must be use for a successful Audit but the two most important phases of auditing for me that we should never taken for granted are the first and second phases which are selection phase and planning phase respectively. In selection phase, auditors conduct a wide risk assessment every near end of the calendar year and develop audit plan for the subsequent year based on the result of this year’s assessment. Planning phase is when the internal auditors interact with their client and gather background information about the client’s business operation. Auditors meet with the university leadership and clients to identify risks and determine the objective and scope of the audit as well as the timing of the report distribution. These two phases must go hand in hand. I believe there is no effective planning without proper assessment in the things or situation for which you make a plan.
2. If I were to audit a company, I would chooses to audit Puregold Price Club, Inc. Puregold Price Club, Inc. engages in the trading of goods through the operation of hypermarkets and supermarkets. As one of their thousands of customers, I’ve experience a poor and slow service in one of their branches here in our place. During this pandemic, as much as possible we tend to stay for a short time in a closed place specially when it is crowded. Every time I purchased something in Puregold, I always notice that there is a long queue and customers always wait for a long time to pay for their purchase in the cashier even though they only have few items in their basket. By auditing Puregold, I want to help them with their daily operations. I want to provide them with the plans and everything they need to improve their service. Do they need more employees? Do they need to have a longer and thorough training for their employees? Something like that.
3. According to Kandarpa, “Checklists vary based on the purpose, audit type, and audit criteria. However, the audit process and auditing principles remain constant.” Here are the Operational Audit Checklist that I have searched on the internet :
o Select competent Auditors
o Screen Auditors/ Clients
o Refine Audit plans and procedure
o Define purpose and scope
o Reference Documents
o Identify administrative and infrastructure support
o Collect information
o Audit Evidence
o Evaluate against Criteria
o Audit findings
o Review findings
o Present report with conclusion and actionable information
o Follow-up to answer questions and concerns
o Follow-up Audit
References
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Eby K. (2017). Operational Audits 101: Processes, Examples, and Checklists
https://www.smartsheet.com/operational-audit-process?amp
It is necessary to ensure that auditors understand their obligation and the process to conduct the audit properly and provide their conclusion based on professional judgments. Selection, planning, execution, reporting, and follow-up are the five phases of an operational audit. They are all significant as they are all part of the process. However, in my perspective, the planning and execution phase is the most important. The planning stage is a critical component of the whole process as it is one of the first procedures in an audit. Inefficient auditing practices come from poor planning, and as such, it is crucial in defining the course of the audit. In reality, audit planning enables auditors and clients to work in an organized manner, allowing for better outcomes in a shorter time frame. According to Sinra (2021), this procedure must be given the attention it needs for the remainder of the audit to go well. As Murdock (2017) put it, "failing to plan is planning to fail." According to this adage, failing to prepare efficiently and weakening potential dangers would end in disaster. Of course, the reason why we are planning is to execute it. The execution phase is executed by Internal Audit staff. Here, clients are kept informed of the audit process through regular status meetings. They discuss audit observations, potential findings, and recommendations with the client as they are identified. Therefore, I consider these two phases of operational audit to be crucial and should never be taken for granted.
ReplyDeleteConsidering the current issue, I would like to audit the Philippine Health Insurance Corporation (PhilHealth). I would like to know what happened to the P15 Billion missing fund. The situation is quite alarming, especially given that we are in the midst of a healthcare crisis. It is natural to question if our money is being spent wisely. The cash should be utilized to lower the cost of medical care for all Filipinos. I would want to see, analyze, and fix any irregularities in their activities since if this continues, many Filipinos will be affected and suffer.
As operational auditors, we need to ensure that what we are auditing is accurate and thorough. GoCardless provides an audit checklist of procedures to ensure that audit is effective. It includes: Selecting and screening auditors; defining audit plans and scope; compiling reference documents; identifying administrative support; researching operational procedures; collecting statistical evidence; audit evidence from all sources; evaluating evidence; compiling audit findings; sharing audit conclusions; providing actionable advice; and following up with questions and concerns. Following this quick operational audit checklist of procedures can lead to the betterment of the audit result.
References:
Sinra, K. (2021, July 24). Why Audit Planning Is So Importance? (Explained). Accessed October 16, 2021, from https://www.wikiaccounting.com/importance-audit-planning/
Wandering CPA. (2021, October 2). OPERATIONAL AUDIT: WHAT ARE ITS PHASES? Accessed October 16, 2021, from https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Taylor & Francis group.
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 17, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
MARANAN, PATRISHA C., 2019-100624
In life, we undergo a series of processes to create progress that buildup the person we are today. It applies the same with operational auditing that assures the organization will become its best version. The auditor uses the operational audit phases as their guide: planning, fieldwork, reporting, and follow-up. And that being said, we should keep in mind that all of the phases in the operational audit play a vital role in accomplishing the goal. I would like to mention how some are just can't be taken so lightly. If I were to pick two, the first one would be planning. It is said to be the crucial phase because this is where the objective and range of the examination takes form. As planning is the backbone of the entire process, it should be sturdy enough to support the subsequent phases as they are interconnected. We cannot do our work offhandedly just to finish it because we would not achieve our desired outcome. It can be compared to hastily entering a business out of impulse and not even bothered to do primary research or review the area if it is suitable enough. Not only are you just wasting your time and money, but countless opportunities are also slipping through because you did not have a solid plan. It does not matter if it takes too long in this phase; as long as it is flawlessly made, it would be worth it in the end. The second one would be the reporting because this will be the discussion of the fieldwork results. The auditors would deliver their observation, whether it is positive or negative, to their clients. They would also give suggestions on the best course of action to take in getting an effective and efficient performance. It is crucial for me because a misunderstanding or an important observation easily dismissed can take everything downhill. Implementation of action plans also happens here, so imagine if there is missing information, then the action plan would not be as effective as expected. An auditor should have a deep comprehension of every situation.
ReplyDeleteIf I'm given a chance to audit one of the companies located in the Philippines, it would be Powerfill holdings inc. It is rapidly growing as years have passed by ever since it was established. Several franchises have opened throughout the nation. I'm curious about how they could have stable growth, especially with a handful of competitors out there, but they are still titled to be the best. An audit plan checklist would be needed to ensure the audit is effective. First in the list would be reviewing the previous audit work so I would know how things work within the organization. Next would be defining the purpose and scale of the audit; it is as if we are making a map. The third would be data gathering to have more additional information as it is essential when doing the fieldwork. After that, we would review our findings and make recommendations on the best way to develop the organization's performance. Last will be to check if the implemented proposal is working as it should be and make adjustments if not.
Eby, K. (2021, July 19). Operational audits 101: Processes, examples, and checklists. Smartsheet. Retrieved October 16, 2021, from https://www.smartsheet.com/operational-audit-process.
Suffrage, F. (2020, July 29). Power fill franchise. Food and Beverage Franchise Philippines. Retrieved October 16, 2021, from https://ifabsuffrage.com/power-fill-franchise/.
ISIP, IRIS G. (2019-103614)
ReplyDelete1.The audit process is significant since it guarantees that no tasks are delayed and that the audit is completed on time. According to Grabillo (2021), there are five phases of operational audit. It includes selection, planning, execution, reporting, and follow-up. Out of all the given audit phases, I think the two most important are the planning and reporting phase.
First, the most significant part of an audit cycle is planning, in which the audit is prepared in terms of what the audit's goal is and what criteria are ideal for achieving that goal in addition that an auditor issues a report on the correctness and dependability of financial statements. Every audit necessitates planning. Internal audit meets with management at the start of the audit to review the audit's goal and risk factors. Management is involved in the planning process and such details are documented in a scoping memo.
The second one is the reporting phase. According to Kenton (2021), “a clean audit report implies a company has followed the accounting standards on the other hand, an unqualified report means there might be errors.” This step is crucial since it includes the audit findings summary, conclusions, and specific recommendations through a draft report.
The final report is being released only when the auditors, management and process owners have evaluated the said report. It is distributed to the management and investor who review it and if necessary, provide changes since it might be challenging for investors to read through the report drilling down to the minute procedures in the process, a consolidated report of all the processes and financial statements is released for the investors instead of a process-by-process report.
2.If given the opportunity, I would like to audit BDO Unibank, as it is one of the major companies in the country, with a profit of roughly 860.7 million US dollars as of the year 2020.
Furthermore, BDO was named the winner of the Global Finance Best Bank Award after meeting a series of criteria that included asset growth, profitability, strategic connections and customer service.
According to some employee reviews, it has a good career advancement opportunity, a good salary package and a friendly environment which is good because it aligns with BDO's code of conduct and business ethics, which states that the company is committed to promoting its employees' physical, social and mental well-being. Its goal is to create an environment free of discrimination, as well as any types of physical, sexual and psychological abuse, such as harassment, bullying and intimidation.
3.A checklist is a specified list of actions that must be followed in order to complete a task. It assists people in being more organized by guaranteeing them that they will not miss any crucial steps in the process. Checklists assist us in moving faster, being more efficient and saving time.
As an operational auditor, a checklist of processes that I would take to guarantee that BDO Unibank, as my firm of choice, has a successful audit is as follows: To begin, choosing and screening auditors since client selection is critical to a business because the profitability and value of the firm are on the line. Next, defining audit goals and scope, as well as gathering reference documents, identifying administrative support, collecting statistical data, auditing evidence from all sources, assessing such evidence, assembling audit results, providing actionable recommendations, and last, following up (GoCardless, n.d.).
References:
Grabillo, M.A. (2021). Operational Audit: What are its Phases? Accessed October 08, 2021. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html?m=1
Ramachandran, A. (2021) Audit Cycle. Retrieved from https://www.wallstreetmojo.com/audit-cycle/
GoCardless. (n.d.). What is an operational audit? Retrieved from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/.
Kenton, W. (2021). Auditor's Report. https://www.investopedia.com/terms/a/auditorsreport.asp
1. The audit process is significant since it guarantees that no tasks are delayed and that the audit is completed on time. According to Grabillo (2021), there are five phases of operational audit. It includes selection, planning, execution, reporting, and follow-up. Out of all the given audit phases, I think the two most important are the planning and reporting phase.
ReplyDeleteFirst, the most significant part of an audit cycle is planning, in which the audit is prepared in terms of what the audit's goal is and what criteria are ideal for achieving that goal in addition that an auditor issues a report on the correctness and dependability of financial statements. Every audit necessitates planning. Internal audit meets with management at the start of the audit to review the audit's goal and risk factors. Management is involved in the planning process and such details are documented in a scoping memo.
The second one is the reporting phase. According to Kenton (2021), “a clean audit report implies a company has followed the accounting standards on the other hand, an unqualified report means there might be errors.” This step is crucial since it includes the audit findings summary, conclusions, and specific recommendations through a draft report.
The final report is being released only when the auditors, management and process owners have evaluated the said report. It is distributed to the management and investor who review it and if necessary, provide changes since it might be challenging for investors to read through the report drilling down to the minute procedures in the process, a consolidated report of all the processes and financial statements is released for the investors instead of a process-by-process report.
2. If given the opportunity, I would like to audit BDO Unibank, as it is one of the major companies in the country, with a profit of roughly 860.7 million US dollars as of the year 2020.
Furthermore, BDO was named the winner of the Global Finance Best Bank Award after meeting a series of criteria that included asset growth, profitability, strategic connections and customer service.
According to some employee reviews, it has a good career advancement opportunity, a good salary package and a friendly environment which is good because it aligns with BDO's code of conduct and business ethics, which states that the company is committed to promoting its employees' physical, social and mental well-being. Its goal is to create an environment free of discrimination, as well as any types of physical, sexual and psychological abuse, such as harassment, bullying and intimidation.
3. A checklist is a specified list of actions that must be followed in order to complete a task. It assists people in being more organized by guaranteeing them that they will not miss any crucial steps in the process. Checklists assist us in moving faster, being more efficient and saving time.
As an operational auditor, a checklist of processes that I would take to guarantee that BDO Unibank, as my firm of choice, has a successful audit is as follows: To begin, choosing and screening auditors since client selection is critical to a business because the profitability and value of the firm are on the line. Next, defining audit goals and scope, as well as gathering reference documents, identifying administrative support, collecting statistical data, auditing evidence from all sources, assessing such evidence, assembling audit results, providing actionable recommendations, and last, following up (GoCardless, n.d.).
References:
Grabillo, M.A. (2021). Operational Audit: What are its Phases? Accessed October 16, 2021. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html?m=1
GoCardless. (n.d.). What is an operational audit? Retrieved from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/.
Kenton, W. (2021). Auditor's Report. https://www.investopedia.com/terms/a/auditorsreport.asp
Sunthorn, Honey Lizette B. (2019-103582)
Audit phases include planning, fieldwork, reporting, and follow-up. These are relevant to be adhered to by the operational auditor because it provides versatility in the business environment. Wherein, it can be used and applied when certain phenomena have undergone in the company’s operation. Also, audit phases help to provide continuous improvement in the management of the company because it involves jotting down old practices and suggesting new and efficient ways that have to be practiced by the company. Lastly, following audit phases is a powerful and straightforward tool because it will help to resolve new and recurring issues which therefore minimizes waste and increases efficiency. Basically, following audit phases is important especially in the operation of a company because it helps to efficiently and effectively identify risks that the company might face in the future and create plans ahead of time on how to overcome them. Among these four phases, the two important phases that I think should never be taken for granted are fieldwork and reporting. First is fieldwork which is the lengthiest part of the audit. Some auditor tends to be uninterested in gathering information and data because it takes a lot of time and effort so the tendency is that they just collect whatever they collect and not to seek for more data which results to ineffective audit result. The second important phase that should never be taken for granted is the follow-up phase. Most people tend to forget everything when it was already done and happened. But as an operational auditor, follow-up is an important phase of auditing because it ensures whether the action plans performed are really implemented and performed. In case an operational auditor fails to follow up, then the audit result is not fully complied with for the reason that it was not efficiently observed and evaluated on its adequacy.
ReplyDelete2/2
ReplyDeleteMoving forward, if there is one company in the Philippines that I would like to audit and performed the audit phases I learned in this course is the Philhealth Insurance Corporation that is a tax-exempt, government-owned, and controlled corporation attached to the Department of Health. I chose this company because from what I heard from the news about this corporation, I notice that there is something wrong with the management of the fund and the management of people inside of this corporation that make it appears to be unethical and fraudulent.
Here’s my proposed checklist to ensure that my audit in this company is effective;
Operational Audit Checklist of Procedures
PHASE 1: PLAN
_____ SELECT COMPETENT AUDITORS - Since Philhealth is an influential corporation, choosing competent auditors is crucial because some might be paid to fake the audit result. I will choose those auditors that have integrity and principles to ensure the relevance of audit results.
_____ SCREEN AUDITEES - Collecting information about the management operation of the employees of the corporation especially the high profile individuals that are involved.
_____ DEFINE AUDIT PLANS AND PROCEDURES - Upon screening auditees, there might be some established hypothesis on what is going on or there is something wrong and therefore create procedures to adhere with it and create plans on audits to be performed.
______ DEFINE PURPOSE AND SCOPE - The purpose of this auditing is to correct the system in the management and suggest solutions on how to minimize the issue and conflict outside the company. The scope of the audit is all the employees who work inside the company.
PHASE 2: DO
______ REFERENCE DOCUMENTS - Conduct a series of interviews and documentation to support the fieldwork and status updates.
______ COLLECT INFORMATION - Collecting of physical and electronic evidence to support claims. This includes testimonials and document inspections.
PHASE 3: AUDIT
_______ AUDIT EVIDENCE - Presentation of data and evidence. This includes professional skepticism, work paper, flowcharts about audit findings, observations such as noted during review, and developing corrective actions and recommendations to the management.
PHASE 4: EVALUATION
_______ FOLLOW-UP - Re-checking the adequacy, effectiveness of the actions taken by the management on reported observations and recommendations. This is the most essential last step to make sure that the corrective action was performed.
References:
Accountants Go Cardless (n.d.). What is an operational audit? Accessed September 30, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Operational Audits 101: Processes, Examples, and Checklists (Jul 19, 2021). All About Operational Audits | Smartsheet Retrieved October 17, 2021, from https://www.smartsheet.com/operational-audit-process
By: Escritor, Rheabelle CBET01503A 2019-106337
Of all the phases of an operational audit, I believe that the two (2) very important phases that should not be taken for granted are fieldwork and follow-up. Usually, planning and reporting are the phases that always been practicing by many auditors, and mistakenly think of the two as the same with the most important phases I have mentioned. Though whatever phases it may be, I prefer to stand for I what I believe in.
ReplyDeleteAccording to the University of Texas at Austin (2021), fieldwork is the evaluation phase which includes assessment of internal controls, compliance, testings, and resources enable to acquire data to support the output process. With this phase, professional skepticism must be applied to have a just and fair judgment. After planning, operational auditors must make sure that the goals are feasible and will not backfire. This is through measuring the potentiality of risks that may happen as of now and the following years and providing ways on how are they going to mitigate it. It provides documents as a result of interviews, inspections, and observations that will sum up the information gathered from clients and the environment. The thing is, risks may duplicate without fieldwork and plans will be worthless if not tested. While follow-up may sound to be simple, but this is entirely the execution of all hard works taken as an operational auditor. Imagine yourself being exhausted from all the years of studying, your follow-up would be the application of the knowledge you have learned from school. This means this is the time where operational auditors will harvest what they have sowed. But if follow-up is not accomplished, then all the plans and strategies, in the long run, will turn to waste. Because the effectiveness and efficiencies of the auditing phase shall only be proven upon follow-up. However, if it is still not that effective and efficient then change of the detailed application of each phase is necessary to improve the strategic process of an entity.
If I were given a chance to audit a local company then that would be the Jollibee Foods Corporation (JFC). I have chosen a fast-food restaurant closest to the hearts of Filipinos because I am afraid that in the next 50 years Filipinos may not be able to experience it anymore. And from what I have observed, JFC had been struggling with this pandemic - many fast-food food restaurants. But before the pandemic, I have seen some JFC branches and franchises around Manila that offer poor service. From the services to the food they serve, there is a way powwow workforce. I only think that maybe because it was a franchise but franchise or not it still carries the image of a known Filipino fast food.
Usually, in a restaurant, there has to be a health inspection visit once a month and it is not only limited to food inspection but also with the way the crew works. And I have experienced that first-hand when I was working in a quick-service restaurant. The following are the procedural checklist to ensure that the restaurant audit is effective (Escano, 2020).
PERSONNEL
o Does the crew make use of proper greetings (drive-thru & store counter)?
o Does the crew practice 5 minutes maximum preparation of orders for dine-in, take-out, and deliveries?
o Does the crew practice proper packaging of orders?
o Does the crew practice hygiene with their must-attires?
STORE STOCKROOMS
o Are the stocks of ingredients not yet expired?
o Are the stocks of ingredients stored in right temperature?
o Are stocks of ingredients meet the maximum order quantity?
FACILITY CHECKING
o Is the store practice general cleaning twice/once a month?
o Is the furniture still in good condition?
o Is the equipment working well?
o Are promotional posters updated and readable?
The University of Texas at Austin. (2021). Audit Process. Office of Internal Audits.
https://audit.utexas.edu/audit-process
Escano, C. (2020). Restaurant Audit Checklists. Auditor.
https://safetyculture.com/checklists/restaurant-audit/
AGULLO, JAMAICA MAE A.
ReplyDeleteCBET-01-502A
Of all the phases of an operational audit, I believe that the two (2) very important phases that should not be taken for granted are fieldwork and follow-up. Usually, planning and reporting are the phases that always been practicing by many auditors, and mistakenly think of the two as the same with the most important phases I have mentioned. Though whatever phases it may be, I prefer to stand for I what I believe in.
According to the University of Texas at Austin (2021), fieldwork is the evaluation phase which includes assessment of internal controls, compliance, testings, and resources enable to acquire data to support the output process. With this phase, professional skepticism must be applied to have a just and fair judgment. After planning, operational auditors must make sure that the goals are feasible and will not backfire. This is through measuring the potentiality of risks that may happen as of now and the following years and providing ways on how are they going to mitigate it. It provides documents as a result of interviews, inspections, and observations that will sum up the information gathered from clients and the environment. The thing is, risks may duplicate without fieldwork and plans will be worthless if not tested. While follow-up may sound to be simple, but this is entirely the execution of all hard works taken as an operational auditor. Imagine yourself being exhausted from all the years of studying, your follow-up would be the application of the knowledge you have learned from school. This means this is the time where operational auditors will harvest what they have sowed. But if follow-up is not accomplished, then all the plans and strategies, in the long run, will turn to waste. Because the effectiveness and efficiencies of the auditing phase shall only be proven upon follow-up. However, if it is still not that effective and efficient then change of the detailed application of each phase is necessary to improve the strategic process of an entity.
If I were given a chance to audit a local company then that would be the Jollibee Foods Corporation (JFC). I have chosen a fast-food restaurant closest to the hearts of Filipinos because I am afraid that in the next 50 years Filipinos may not be able to experience it anymore. And from what I have observed, JFC had been struggling with this pandemic - many fast-food food restaurants. But before the pandemic, I have seen some JFC branches and franchises around Manila that offer poor service. From the services to the food they serve, there is a way powwow workforce. I only think that maybe because it was a franchise but franchise or not it still carries the image of a known Filipino fast food.
Usually, in a restaurant, there has to be a health inspection visit once a month and it is not only limited to food inspection but also with the way the crew works. And I have experienced that first-hand when I was working in a quick-service restaurant. The following are the procedural checklist to ensure that the restaurant audit is effective (Escano, 2020).
PERSONNEL
o Does the crew make use of proper greetings (drive-thru & store counter)?
o Does the crew practice 5 minutes maximum preparation of orders for dine-in, take-out, and deliveries?
o Does the crew practice proper packaging of orders?
o Does the crew practice hygiene with their must-attires?
STORE STOCKROOMS
o Are the stocks of ingredients not yet expired?
o Are the stocks of ingredients stored in right temperature?
o Are stocks of ingredients meet the maximum order quantity?
FACILITY CHECKING
o Is the store practice general cleaning twice/once a month?
o Is the furniture still in good condition?
o Is the equipment working well?
o Are promotional posters updated and readable?
The University of Texas at Austin. (2021). Audit Process. Office of Internal Audits.
https://audit.utexas.edu/audit-process
Escano, C. (2020). Restaurant Audit Checklists. Auditor.
https://safetyculture.com/checklists/restaurant-audit/
All the phases of Operational Audit should be considered as a significant part of auditing itself. However, in my opinion, the planning and the fieldwork are phases that should highly be recognized as the very important phases of an audit, the phases that should never be taken for granted, not even for once. An audit can not be done without undergoing in the planning and fieldwork phases because the cycle begins with the fulfillment of these two phases. In planning, this is where risks are identified, where problems are being addressed, where information and processes are examined, where strategies are formed and where audit plans are prepared. The planning phase of an audit can be compared to a basic necessity of a growing man, such as food, clothing and shelter, it is the very essence of auditing and without it nothing but low-quality results will outcome from the audit. Aside from planning, the fieldwork phase also has an important role to give to an effective audit. These two phases can be done at the same time, wherein planning can happen during a fieldwork. It is a given that not all plans can work as expected when not tested for its performance and further improvements because risks and issues may always emanate from unanticipated events. In my opinion, it is a very effective way to leverage the both testing and planning phase in order to accurately and objectively established strategies and processes that suits best for the organization’s goals and success.
ReplyDeleteIf I were given a chance to audit a certain company, it would be the Philippine Long Distance Telephone or as we all know as PLDT, one of the biggest telecommunications companies here in the Philippines and is considered as one of Philippines Top Companies as listed by the Market Cap as of September 2021. As the pandemic derailed the country’s economic condition, telecommunication companies flourish through the crisis due to the sudden halt of almost everyone’s outdoor activities, such as people’s job and education of students. It was their services that is needed the most at the time by the people but complaints also flooded the same time as their customers grew. I want to audit PLDT because I want to know as well, what kind of difficulties are they having that made them ignore complaints from their loyal customers and neglect the very essence of giving convenient services to people. It's common that a company should earn well and at be one of the top leading companies in a country's list but having quite the bad reputation just by hearing the name because it provides more issues than solutions is something companies should address and focus on. I want to change PLDT into a company that benefits not only the business itself but also all the clients and customers.
According to Gocardless, the Following is the simplest yet precise checklist, of must-do-things of auditors, like me, in order to effectively audit the operational activities of the PLDT company:
ReplyDeleteo Select and screen auditors
o Define audit plans and scope
o Pull together reference documents
o Identify administrative support
o Research operational procedures
o Collect statistical evidence
o Audit evidence from all sources
o Evaluate evidence
o Compile audit findings
o Share audit conclusions
o Give actionable advice
o Follow up with questions and concerns
In my opinion, this definite list of tasks can completely make an audit more objective, that bases its decision through facts and evidences, can help the PLDT company achieve a good reputation, where benefits are maximized to both customers and the firm, and can help achieve the success that the PLDT company is aiming for.
References
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC. pp 33.
Accountants Go Cardless (n.d.). What is an operational audit? https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Value.Today (2018-2021). Philippines Top Companies List by Market Cap as on Sep 1st, 2021. World's Most Trusted Website. https://www.value.today/headquarters/philippines
ERANDIO, JANNA A.
2019-103533
CBET-01-501A
1. Of all the phases of Operational Audit, list a minimum of two phases that you simply think are vital and will never be taken for granted?
ReplyDeleteAmong the five phases of an operational audit, the three topmost essential phases are planning, execution, and reporting.
As quoted by Freie University (nd.) from the work of Mitchell (2002), planning is a process of formulating strategies that enables the planner and other interested persons to achieve desired objectives, solve problems, and facilitate courses of action. In the audit field, this phase requires familiarization with the background information and controls, development of strategies, and distribution of audit activities (PGIAM, nd.). It is specifically focused on the identification and formulation of planned risk assessment procedures and planned responses to risks (PCAOB, nd.). Thus, it is a goal-oriented, pervasive, futuristic, intellectual, and continuous activity that helps managers in decision-making (Surbhi, 2016).
Good execution is rooted in a good strategy (Favaro, 2012). It is an integral part that determines the success of the ideas. With this, execution is as important as planning and the other way around. Execution is the process of remodeling the planned idea into something tangible (MBA Rendezvous, 2020). In auditing, it involves analogy of evidence, comparison of conditions, determination of probable causes, preparation of working papers, and integration of audit findings (PGIAM, nd.).
To check whether things worked or not, audit reporting/evaluation is vital. Generally, evaluation determines plausibility, probability, or adequacy of the work done. It includes the completion of audit findings and communication of proposals (PGIAM, nd). This phase is essential because it is the judgment part of the method. It helps identify how a corporation could improve its operations to reach value satisfaction and avoid repeating failures.
2. The precise areas of scrutiny in an operational audit will depend on the type of business being audited. Choose a minimum of one (1) company within the Philippines you'd wish to audit and why?
Philippine Health Insurance Corporation (PhilHealth) is a government-owned and -controlled corporation under the supervision of the Department of Health. Its assignment is to ensure health care coverage and accessible country-wide health care services.
The year 2020 (month of July) when allegations of widespread corruption concerning PhilHealth funds sparked. It took the agency seven months to issue a circular explaining the liquidation of the P15-billion fund while claiming that none of it was corrupted. Although the management had given their data, I cannot help but question its credibility--to think that the country is facing an epidemic and, therefore, the concerned sum of cash is a material amount. For this reason, PhilHealth is at my topmost interesting corporations to audit.
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- PARAGAS, DANIELA T.
2019-104925
CBET-01-402A
(CONTINUATION FOR THE COMMENT ABOVE)...
ReplyDelete3. Of the chosen company you would like to audit in number 2 above, provide an operational audit checklist of procedures to make sure that audit is effective.
NOTE: All information is summarized from the Philippine Government Internal Audit Manual (PGIAM) constructed by the Department of Budget Management (DBM). I specifically chose to use it because it is formulated for state organizations.
To access the detailed information of procedures, use the link http://www.tanauanwd.gov.ph/wp-content/uploads/2016/04/TWD-IC-Manual-Part-II-II.-Audit-Process.pdf
Step 1: Audit Engagement Planning
A. Understanding of the program and project
- Selection of internal controls and review of laws and regulations
- Evaluation of control effectiveness
- Determination of effectiveness, efficiency, ethics, and economics.
B. Establish the audit objective, scope and criteria, and audit evidence
C. Determine the resource required for the audit and therefore the target milestone/dates
D. Formulate the audit plan and program
E. Diagnose the Key Performance Indicators (KPIs) of the audit engagement
F. Secure approval of the audit plan, program, and KPIs
Step 2: Audit Execution
A. Entry conference (discussion of focus, timelines, requirements, and expectations)
B. Conduct compliance audit
- Gather and analyze evidence
- Compare conditions
- Determine probable causes
- Prepare working papers
- Integrate and highlight audit findings
C. Conduct system/process audit (same as above)
D. Exit conference (discussion of audit findings)
Step 3: Audit Reporting
A. Gather audit findings
B. Formulate audit recommendations
C. Prepare draft audit report
D. Report to the general management
E. Prepare the ultimate audit report
Step 4: Audit Follow-up
A. Monitor implementation of approved audit findings and proposals
B. Resolve non- and/or inadequate implementation of audit recommendations
C. Prepare audit follow-up report
REFERENCES:
Favaro, K. (2012) Strategy or execution: Which is more important. Retrieved from https://www.strategy-business.com/article/cs00005
Freie University (nd.) What's meant by planning and management. Retrieved from https://www.geo.fu-berlin.de/en/v/geolearning/watershed_management/introduction_wm/natural_resource_management_planning/definitions_planning_management/index.html
MBA Rendezvous (2020). Execution is more important than planning. Retrieved from https://www.mbarendezvous.com/extempore/execution-is-more-important-than-planning/
Philippine Government Internal Audit Manual (nd.). TWD-OGM-ICS Internal controls manual (part 2). Retrieved from http://www.tanauanwd.gov.ph/wp-content/uploads/2016/04/TWD-IC-Manual-Part-II-II.-Audit-Process.pdf
Public Company Accounting Oversight Board (nd.). AS 2101: Audit planning. Retrieved from https://pcaobus.org/oversight/standards/auditing-standards/details/AS2101
Surbhi, S. (2016) What's planning? Definition, characteristics, steps, and importance. Retrieved from https://businessjargons.com/planning.html
- PARAGAS, DANIELA T.
2019-104925
CBET-01-502A
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ReplyDelete1. Audit process requires a considerable amount of time to complete. There are five phases of operational audit: Selection, Planning, Execution, Reporting, and Follow-Up. Client involvement is significant at each stage of the audit process. Internal auditors find ways to make the auditing fairer and they want to make sure that procedures are running well and those proper control mechanisms are in place. One of the key objectives following these audit phases is to minimize the time and avoid disrupting ongoing activities. Among the mentioned audit phases, if I were to choose at least two of them that should not take for granted these are the planning phase and reporting phase. In the planning phase, the auditor must identify and evaluate the potential risks. Planning contains risk assessment procedures in which we assess the potential risk that has an impact on internal controls, policies, or compliance of the organization if it is low, medium, or high risk and if the client needs extensive audit procedures or sufficient appropriate requirements. The final output of the audit planning phase is to prepare an overall audit strategy, audit plan, and audit program because this could affect collecting evidence considering that the client may not be able to provide supporting documents the auditors required. The benefit of planning is it gives attention to which areas require an important aspect of the audit. The essence of the planning phase is to plan when and how to execute the audit effectively and efficiently. I believe that the planning phase takes an important role where the results agreed upon by the audit team are used and this will determine the success of the subsequent phases.
In the reporting phase communication of results and developing recommendations take place. Upon the completion of fieldwork is compiled, the auditor outlines the audit findings, conclusions, and suggestions for the discussion draft of the audit report. A draft report is sent to the client that contains a summary of the audit results, conclusions, and specific recommendations. The client must provide action plans with time frames that address all recommendations. A final summary report includes a response and implementation plan from management that goes to Senior Management and the Audit Committee for review.
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ReplyDelete2. The company that I would like to audit is SM Investment Corporation. One of the largest and leading companies in the Philippines which is engaged in property development and mall operation. The global pandemic has caused a major economic shock and tests the fragility of a business, some are forced to shut down, and others file for bankruptcy. To be part of an audit team where we assess risks and internal controls our audit opinion matters help adjust to the economic disruptions and is proactively committed to the company’s objective. For over six decades, I think the success of the company lies in good corporate governance, implementation, and monitoring of succession strategies based on the reports of the auditing team linking to strategic goals, identification of talent pools, and the analysis of continuity issues and gaps for the long-term goals.
3. According to Kandarpa “Checklists vary based on the purpose, audit type, and audit criteria. However, the audit process and auditing principles remain constant.” To prepare a more comprehensive scope for their internal audit, here is a framework that can be broken down into separate activities - plan, do, check, and act. Planning consists of selecting competent auditors, screening auditees, defining audit plans, procedures, purpose, and scope of the audit. SM Investment involvement in different industries requires thorough planning presenting a series of guidelines for the process to take place in the best possible way. On the other hand, do comprise the following, reference documents, identify administrative and infrastructure support, and collection of information. Moreover, to support an audit process we need audit evidence and evaluate against criteria. We have to assess whether the conclusions presented are aligned with the evidence gathered during the fieldwork phase. To conclude the checklist, act covers the presentation of the report with conclusions and actionable information, follow-up to answer questions or concerns, and follow-up audit. These checklists help you create a flexible, risk-based audit program and as an auditor, we ensure to deliver valuable outcomes to our clients.
References:
Chicago State University (2021). Audit Process https://www.csu.edu/internalaudit/auditprocess.htm
Eby, K. (2021, July 19). Operational Audits 101: Processes, Examples, and Checklists. Retrieved October 15, 2021, from https://www.smartsheet.com/operational-audit-process
Pablo, Ma. Rowena ( 2019-106997)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteAll of the phases of Operational audit is essential and has their own importance in completing the audit but if I really have to choose 2 then I would choose the selection phase and the reporting phase. The selection phase is important because it is critical to detect all potential risks that require immediate attention before any damage is done, and if the auditor takes it for granted because it is the first phase in auditing, the auditor may overlook a larger risk, putting the business at greater risk as they will be completely unaware, so it is crucial to detect all risks in order to take corrective action before anything happens. And then the reporting stage because I believe that if the auditor was not able to communicate properly the findings and the recommendations to the company then the whole audit process that has been done is useless. It is important that the company completely understands what are the findings and what they can do to mitigate the risk to be able to optimize their effectiveness and efficiency to make the whole auditing beneficial especially that in some cases it is costly and time consuming.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
Every company has their own problem within their company whether it is their unmotivated employees, customer service or even their whole system might be a problem that hinder them to run efficiently. If I were to chose one company in the Philippines that I would like to audit, it is the Philippine Long Distance Telephone Company (PLDT) because it is one of the country's major telecommunications providers and as of 2019, it is listed in the Philippine Stock Exchange and New York Stock Exchange which is the only Philippine company to be listed in NYSE. I want to audit them to know how they manage to continue to grow their company even having unsatisfied customers. I know that strong internet connection has been a problem in our country but I believe that PLDT can do something to make it better since they were running for a long time now.
As an auditor, I'm interested in learning about the issues that are preventing them from providing quality service even as one of the Philippines' most successful companies. I want to be able to advise them on how they can make their customer happy so that they would continue to choose the firm as the company grows to be one of the most successful.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
PDCA checklist for the operational audit process:
PLANT
✓ Select Compentent auditors
✓ Screen Auditees
✓Define Audit Plans and Procedures
✓Define purpose and scope
DO
✓Reference Documents
✓Identify Adminitrative and Infrastructure Support
✓ Collect Information
AUDIT
✓ Audit Evidence
CHECK
✓ Evaluate Against Criteria
✓ Audit Findings
✓ Review Findings
ACT
✓ Present Report with Conclusions and Actionable Information
✓ Follow-up to answer questions or concerns
✓ Follow-up Audit
Even with the provided checklist, this won't apply to every company because every company is special and sometimes need another set of process that is just designed specifically just for them. We need to make sure that the process suits them to be able to evaluate the company properly to detect all potential risks and take the necessary actions.
Reference:
Eby, K. (2017). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
ReplyDeletePART 1
[1] Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
The audit phases are necessary to make a sound operational audit report that will help the organization to improve its effectiveness, efficiency, and overall performance. Every step in auditing requires an equal amount of attention, but the planning and follow-up phase needs extra mindfulness.
In planning, the audit team involves the actions necessary to think and organize the activities to achieve their goals (Murdock, 2017, p. 267). At this stage, a plan is created that defines tasks required to produce the project's products and services, estimates of resource requirements and associated costs, and the time needed to complete the work. On the other hand, in the follow-up phase, the evaluation of the corrective actions taken happens. In follow-up, the audit team may also give alternatives that can lead to improvement in business operations.
The West Virginia University (n.d.) mentioned that a successful audit relies on sound planning and constructive integration and communication between the client and the internal audit department. The goal is to involve the client's administration in each phase of the audit. Management involvement leads to a better understanding of how the unit works and a more effective implementation of recommendations.
[2]
The pandemic forced people all over the globe to limit their movements. This event resulted in a higher demand for business in e-commerce. Investopedia (n.d.) defined it as a business model that allows companies and individuals to buy and sell goods and services over the internet. Now, many people rely on these businesses to satisfy their different needs and wants.
One of the in-demand industries during this time is food delivery services. For that case, I prefer to conduct an operational audit in a company that performs food ordering and delivery services, specifically Foodpanda Philippines. This company allows its customers to conveniently find food in their vicinity and directly order their favorite meals online or on mobile. I chose their company because of their increasing number of customers. The need to ensure that they provide quality service for their growing number of customers requires operational auditing.
The ultimate goal of an operational audit is the optimization of the overall performance of a business. By reviewing internal company policies and procedures, the company can identify problem areas and work more effectively. The results are of great value to the management team, who can consider these recommendations to improve future processes (GoCardless, n.d.).
FRANDIAN A. BLANCO, 2019-103951
PART 2
ReplyDelete[3] Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
A checklist is a standardized list of required steps. Checklists help people work quickly, be more efficient, and save time (Delos Santos, 2019). In auditing, different nature of business operation needs different audit checklist. GoCardless (n.d.) listed the general operational audit checklist that must that needs to follow for better system flow: (1) select and screen auditors; (2) define audit scope; (3)pull together reference documents; (4) identify administrative support; (5) research operational procedures; (6) Collect statistical evidence; (7) Audit evidence from all sources; (8) Evaluate evidence; (9)Compile audit findings; (10) Share audit conclusions; (11) Give actionable advice: and (11) follow up with questions and concerns. These will help the audit team stay more organized and make sure they don't skip any steps in the process.
References:
West Virginia University. (n.d.). Audit Phases. West Virginia University - Internal Audit. Retrieved from: https://internalaudit.wvu.edu/audit-services/audit-phases
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. CRC Press Taylor & Francis Group
Investopedia. (n.d.). Electronic Commerce (Ecommerce). Retrieved from: https://www.investopedia.com/terms/e/ecommerce.asp
GoCardless. (n.d.). What is an operational audit? Retrieved from: https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Delos Santos, J. M. (2019, July 24). The Importance of Checklists in the Workplace. Bridge24. Retrieved from: https://bridge24.com/blog/the-importance-of-checklists-in-the-workplace/
FRANDIAN A. BLANCO, 2019-103951
[1/2]
ReplyDeleteOperational auditing analyzes the business structure for improvement in its management efficiency (Accounting Tools, 2021). According to Murdock (2017), the operational audit phase composes of four. The stages are planning, fieldwork, reporting, and follow-up. Of the four aforementioned, I would only highlight planning and fieldwork. Although we must take note, all are important and should not be taken for granted.
Planning, in my opinion, is like the framework of the process. Without planning, it may be impossible to continue to the next stage, for you have no weapons brought against a battle. As your weapon is a strategic audit plan (Murdock), the auditor should be meticulous in risk assessment and not carelessly oversee data.
After planning, fieldwork takes place. Since fieldwork is trial and error, the auditor must see an appropriate plan execution, and there is a disclosure of relevant findings with the client. Not only that but performance towards an unforeseen circumstance (if any) includes careful action so that things would not get out of hand. Together with the planning, I think the fieldwork is the top 2 most important phases. The results may be incorrectly presented, but the findings never lie.
Since experience is the best way to learn, I would like to apply the operational audit phases in NutriAsia if given a chance. NutriAsia (2021) is the home of popular products such as UFC, Mang Thomas, and DatuPuti. I have always been curious as to why the company is not able to regularize workers despite being known locally and internationally. As reported by CNN Philippines (2018), NuriAsia engages with labor-only contracts, which are considered illegal under the Labor Code and Labor Department 174, as per the findings of DOLE.
Jornell Quiza, a hired contractor to work for NutriAsia, said that they are the ones paying for their uniform or protective gear with their salary of just 380 pesos per day. They were promised reimbursement, but not all are compensated. Sometimes, they work over 12 hours to meet ends with their salary (Bautista & Rey, 2018).
Back in 2018, the call against “Endo” or “Contractualization” became a bloody fight in a literal sense as violence took place when protesting against the company (Cabico, 2018). That made a huge impact on me when I was still in senior high school, and I could not forget that. It was the first time I heard about the conditions of being a labor-only worker. Being their operational auditor, I could build a bridge between the workers and the management.
DUEÑAS, ALYSSA MAE B. (2019-102691)
[2/2]
ReplyDeleteTo ensure an effective audit through operational, compliance, and departmental reviews in NutriAsia, I would implement the Plan, Do, Check, Act Cycle (PDCA) promoted by IS0 9001. Hammar (n.d.) reports that the PDCA came from the two fathers of modern quality control, Walter Shewhart who developed it, and Edward Deming that made it prominent. He affirms that the cycle would lead to continuous improvements as its repetition is for adapting to change.
The checklist below accomplishes the PDCA.
As to program by Seetharam Kandarpa (Eby, 2017), it contains:
• Establishing Objectives
• Establishing the Audit Program
• Implementing the Audit Program
• Monitoring the Audit Program
• Reviewing and Improving the Audit Program
The checklist above may be similar to Murdock’s operational audit phases. What I have noticed is that both are determined towards improvements as their last steps have checking upon the plan.
It is necessary to follow the operational audit phases as it serves as a path for auditors. Moreover, as each stage is vital, auditors should be attentive while overseeing the process. The management should also see to it that they adhere to compliances to avoid unnecessary risks. Lastly, a firm should develop and constantly improve auditing techniques to gain opportunities rather than threats.
Who knows, you might be the next Nokia in the making.
References:
Accounting Tools. (2021, April 9). Operational audit definition. Accounting tools. Retrieved October 17, 2021 from https://www.accountingtools.com/articles/2017/5/9/operational-audit
Bautista, J & Rey, A. (2018, June 18). LOOK: Why NutriAsia workers are on strike. Rappler. Retrieved October 17, 2021 from https://www.rappler.com/nation/reason-nutriasia-workers-on-strike
Cabico, G. K. (2018, July 30). Violent dispersal of NutriAsia workers draws wide condemnation. https://www.philstar.com/headlines/2018/07/30/1838184/violent-dispersal-nutriasia-workers-draws-wide-condemnation
CNN Philippines. (2018, August 9). NutriAsia: 'We support workers' rights and privileges'. CNN Philippines. Retrieved October 17, 2021 from https://cnnphilippines.com/news/2018/08/09/NutriAsia-workers-rights-labor-issue.html
Eby, K. (2017, September 19). (Ed.) (2021, July 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. Retrieved from smartsheet.com/operational-audit-process
Hammar, M. (n.d.) Plan-Do-Check-Act in the ISO 9001 Standard. 9001 Academy. Retrieved October 17, 2021 from https://advisera.com/9001academy/knowledgebase/plan-do-check-act-in-the-iso-9001-standard/
NutriAsia (2021). NutriAsia. Accessed October 17, 2021 from https://nutriasia.com/
DUEÑAS, ALYSSA MAE B. (2019-102691)
REMELYN SABANGAN CBET 01-503A
ReplyDelete2019-101964
1. As previously discussed, operational auditing is inherently complex as it entails a systematic procedure comprised of phases that must be followed with precision in order to produce high-quality, more reliable, and accurate audit findings. Although I consider these phases to be equally significant in the auditing process, I consider planning and execution to be the most important and which should never be undermined.
Firstly, planning is the initial process in auditing, it is important since this phase involves defining of the audit’s scope, objectives, and budget based on the available resources and priorities of the company. More than mere words, this phase is extremely important as we do not want to come up with poor plan that can only lead to inefficient auditing practices. For an instance, poor planning will lead to incurrence of higher cost as it will transpire to duplication and unnecessary work, inefficient turnaround time, and, of course, rework will be prevalent since procedures are initiated poorly, only to be reconfigured. For this reason, adequate and better planning is necessary for the auditors to keenly identify relevant activities, systems, people, performance standards, and properly assess inherent and operational risks. With this, they would be able to exert greater control over these things as soon as possible to minimize potential repercussions.
Next is fieldwork, which is the execution of audit plan. This is also one of the most important phase for me since I believe that no matter how precise and well-structured our plan is, it will not efficiently and successfully address the problems if it is not implemented effectively and promptly. Throughout this phase, the auditor may discover that further reorganization is required. For an instance, conditions that differ from expectations may develop, or concerns that were first regarded to be low risks turns that those are actually high risks, or vice versa. When this transpires, auditors must re-evaluate the situation and figure out how to reorganize the initial plan so that the remaining resources may be used to implement newly-formulated corrective actions.
2. If I have the opportunity to work for one of the Philippines’ oldest and most diversified corporations, I would be more than willing to audit Ayala Corporation. Ayala Corporation was established in 1834 and has core interests in real estate, banking, telecommunications, and power. Since I was a child, I’ve always wanted to work for a huge corporation where I could not only further advance my career but also pursue my purpose of being socially responsible. Ayala Corporation has been socially committed throughout their business success; they’re not just concerned with profit, but they’re also focused on improving the lives of Filipinos, primarily through education, youth leadership, and providing a sustainable livelihood. Indeed, my interest has been piqued by the company’s deep commitment to nation building and development. In fact, one of the corporation’s energy arm, AC Energy have beefed up its renewable energy initiatives and has partnered with NorthWind Power Development Corp. in Bangui Bay Wind Power project in Bangui, Ilocos Norte. I’m in awe at how they were able to fund these investments, which are meant to improve the lives of our fellow Filipinos. As a result, I’d like to do some auditing in their organization so that I could learn how intensive and intricate their operations are, as well as how they were able to maintain their efficient operations. With their success, it can be reflected that their operational auditors were able to perform their duties and responsibilities with integrity and proper professional care. Hopefully, when the opportunity arises, I will also be able to contribute significantly to the company’s success.
ReplyDelete3. Since operation audit process is a systematic procedure, I would like to adhere to its phases in order to ensure that the process are being done with quality. With that I would like to provide checklist that is in accordance to the different phases of the audit process.
1.Planning
•Defining the firm's scope and objective.
•Defining the population of interest.
•Identifying the systems in use.
•Budgeting and organizing work schedule.
•Requesting of needed financial and operational reports and documents.
•Risk-Assessment.
•Strength analysis.
•Layout of the audit plan.
•Meeting with the stakeholders for the approval or modifications of the audit plan.
2.Fieldwork
•Interviewing.
•Documentation.
•Application of testing methodologies.
•Assessment of audit evidences.
•Status updates.
3.Reporting
•Communication of results.
•Verification of gathered information.
•Concise presentation of data.
•Development of recommendations for corrective action.
4.Follow-up
•Verification that the corrective actions were working as intended
•Check if the management were able to provide adequate procedures so that the corrective action will work as intended.
•Ensure that the corrective action was able to address the concern efficiently, effectively and economically.
REFERENCES:
University of Oregon. (n.d.). Audit Process. Accessed October 4, 2021. https://internalaudit.uoregon.edu/report/audit-process
Cruz, N. (2019). The Milestones That Made Ayala Corporation One of the Largest Conglomerates in the Country. Esquiremag.Ph. Retrieved October 15, 2021, from https://www.esquiremag.ph/the-good-life/mavericks/ayala-corp-history-a00300-20190922-lfrm2
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
REMELYN SABANGAN CBET 01 – 503A 2019-101964
(1/2)
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
For me, of all the phases of Operational Audit, nothing should never be taken granted for all of them are equally important. Operational Audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans. Losing even just one from these phases could potentially ruin the whole process.
With the selection phase, audit activities are selected using a risk based approach. Internal audit meets with leadership and management during the development of the annual audit plan to discusses risks and potential impediments to meeting objectives. This plan is approved by the Executive and Audit Committee of the Board of Trustees. Audits can also be conducted based on concerns reported on the fraud and ethics hotline.
The next one is the planning phase. Each audit requires planning, starting from defining the scope and objective to developing audit steps to meet the objective. Internal audit conducts an entrance meeting with management to discuss the purpose of the audit, risk factors, and other logistics. Management is included in the planning phase and the details are documented in a planning and scoping memo.
Then during the fieldwork phase, auditors conduct the steps identified in the planning process. Steps often include conducting interviews, reviewing laws, policies and best practice, verifying sample transactions, analyzing data sets, and conducting surveys. Auditors meet regularly with management throughout fieldwork and discuss the status of the audit, preliminary observations, and potential recommendations.
Another phase is the reporting phase where auditors conduct an exit meeting with management at the conclusion of the fieldwork to discuss the results of the audit, specific findings and recommendations and other observations. These responses are included in the final report. Management and leadership are provided an opportunity to review drafts and provide feedback.
And finally, the follow-up phase where all audit recommendations and management corrective action plans are followed up on to provide assurance that plans are implemented. Corrective action plans that do not appear to be progressing are reported annually to the president and Executive and Audit Committee.
—CRUZ, IVY FRANCESCA SN. (2019-103873)
(2/2)
ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I were to audit at least one, I would not choose a company or any business, I would really like to audit any public sector that handles the budget which came from the Filipino’s taxes. I’d like to know and thoroughly investigate whether the process of collecting and spending public funds, as well as other relevant transactions, complies with the laws and regulations, and whether there has been any mismanagement of public revenue and expenditure. I’d like to expose those government officials who benefit at the expense of the public funds.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Written below would be my guide for the operational audit checklist of procedures:
∵ Select and screen auditors
∵ Define audit plans and scope
∵ Pull together reference documents
∵ Identify administrative support
∵ Research operational procedures
∵ Collect statistical evidence
∵ Audit evidence from all sources
∵ Evaluate evidence
∵ Compile audit findings
∵ Share audit conclusions
∵ Give actionable advice
∵ Follow up with questions and concerns
Checklists are useful tools for better organizing and verifying your most critical auditing activities quickly and efficiently. They were created to reduce errors and assure consistency and thoroughness in the execution of audit.
References:
University of Oregon (n.d.). Audit process. https://internalaudit.uoregon.edu/report/audit-process
Go Cardless (n.d.). What is an operational audit?. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
—CRUZ, IVY FRANCESCA SN. (2019-103873)
All Phases of Operational Audit are important, but here’s the two most important for me that should never be taken for granted. First one is the planning. In this phase, Internal Audit employees acquire essential background information and begin contact with the customer during the planning phase of each project. Auditors engage with university leadership and clients to identify risks and to define the audit's objectives and scope, as well as the fieldwork schedule and report dissemination. Appropriate audit planning will guarantee that critical areas of the audit receive adequate attention and that any problems are recognized in a timely manner. Second Important phase for me is the Reporting Phase. During this phase, a draft report is used to provide to the customer a summary of the audit findings, conclusions, and specific suggestions. The audit's completion stage is quite important. The auditor analyzes the evidence gathered during the audit, as well as the final version of the financial statements, during the completion stage in order to determine the auditor's conclusion.
ReplyDeleteIf I were to audit a company here in the Philippines, I will choose SM Supermalls. Since I was a kid, my parents always bring me here. And as I grow up, I realize how big this company is. How good the founder is and how successful it has become. Someday, if I may, I want to be part of this big company.
As I go through their Independent Auditors’ Report, I am more mesmerize by their information written there. For them, The procedures selected depend on the auditorÃs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entityÃs preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityÃs internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
References:
ACCA. (n.d.). Completing the audit. P7 Advanced Audit and Assurance | ACCA Qualification | Students | ACCA Global. Retrieved October 17, 2021, from https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/completing-the-audit.html.
Mwansa, F. (2016, March 12). Can you explain the importance of planning the audit? Bayt.com. Retrieved October 17, 2021, from https://specialties.bayt.com/en/specialties/q/270635/can-you-explain-the-importance-of-planning-the-audit/.
Bienice Desiree B. Barrometro
2019-101546
Cbet-01 501A
1.) All of the operational auditing phases are critical, but the one that I believe we should not take for granted is the planning phase.
ReplyDeleteInternal Audit staff gather relevant background information and initiate contact with the client during the project planning phase.
Auditors meet with University leadership and clients to identify risks, define audit objectives and scope, and plan fieldwork and report distribution, as well as the selection phase.
Based on the results of this assessment and the department's available resources, we develop the audit plan for the following year.
2) if i were to audit a company here in the Philippines, i wanted to be the auditor of the nestle company because of its large scale target and it helps me to learn more on how they manage to be continuously stable for the long term of their company, how they faces their risk when it is much more than they are expected. And most of all, they have a lot of free to eat nestle products inside their building where i can save money while doing my job as an auditor and nestle is i think the hardest company to fall down and because thats what my teacher said and nestle compnay is one of my target company i wanted to work in near future.
3.) Quality and Safety for our consumers is Nestlé’s top priority. This applies to our entire portfolio, from foods and beverages to all our systems and services. Our Quality Management System is the platform that we use globally to guarantee food safety, compliance with quality standards and to create value for consumers. Our internal Quality Management System is audited and verified by independent certification bodies to prove conformity to internal standards, ISO norms, laws and regulatory requirements.
Quality Management System starts on farms. We have a long history of working together with farmers in rural communities to help them improve the quality of their produce and adopt environmentally sustainable farming practices.
References :
Lawrence, KS (2014). The Audit Process. Retrieved October 17, 2021, from https://internalaudit.ku.edu/project-process
Nestle (2021). Quality and safety. Retrieved October 17, 2021, from https://www.nestle.com/aboutus/quality-and-safety
Victorio,Boy D.
2019-101186
Cbet 01-501A
Among all the audit phases I think the two most important step is the planning and reporting phase. In planning they understand the whole company, they assess the firm’s environment, control and policy procedures, identify risk and minimize its effects. A statement mentioned by (McGrady, 2018) ‘Risk assessment is the foundation of an audit. For auditors, it is how we come to understand your company and plan our audit procedures to provide the most reliable information for you and the users of your financial statements.’ Planning phase will be the basis of all audit strategy that requires plenty of time. During the reporting stage of performance audit. Auditors are presenting their conclusion and recommendation. The observations made are communicated to the users which will them in their decision making. All the observation during the performance phase where presented, all changes in the action plan is also belongs in this stage, that is why It think we should never ignore the importance of these phase.
ReplyDeleteIf I were to choose one company to audit it will the new internet provider Converge ICT Solution Inc. this internet provider provides affordable internet with fiber yet their customer service is poor. Since in this time of pandemic all students and parents are at home it is essential to have an excellent service. An internet is recognized as a necessity since most of us rely to this. I would like to understand the company’s goal and objectives. Look for deficiency most especially in their customer service. Moreover, all their inadequacy not only in their service but also in their response and action are what motivates me to audit their company in the future. To implement all corrective action for them to achieve their vision which is to be a “World Class ICT Organization that empowers people, business and the nation to be their best.
These are audit procedure checklist that I would follow to attain such goal, first by establishing an objective. Considering the characteristics of a product, project process, and changes to them. Next is to form an audit program, by identifying the scope and potential risks, then set procedures and identify resources. Implementation of audit program, Define the objectives, scope, and criteria, and select the audit team members and assign responsibility to the audit team leader. Then monitor the audit program, assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team members and the ability of the audit teams to implement the plan. Evaluate feedback of all stakeholders. Last is to review and improve the audit program (Eby, 2017).
References
Canadian Audit and Accountability Foundation . (n.d.). Retrieved from Google : https://www.caaf-fcar.ca/en/mining-revenues-audit-methodology/the-reporting-phase
Converge. (n.d.). Retrieved from Google : https://corporate.convergeict.com/
Eby, K. (2017, September 19). Smartsheet . Retrieved from Google : https://www.smartsheet.com/operational-audit-process
MICAH LEI C. LONGNO (2019-106978)
CBET 01 - 5032A
With all the phases presented, although all of them are no less important than the others, both planning and conducting the fieldwork are highly regarded by this writer as two of the most essential phases of operational audit and thus, must never be taken for granted. The audit team as well as the management must make certain that they keep an eye on these two as disregarding such phases may potentially taint the entire audit process.
ReplyDeletePlanning, as described by many authors, it is the most vital of all audit phases as it defines the objectives of the audit in its entirety. For example, Khan (2016) devised her own definition of audit planning, she mentioned that audit planning means “developing a general strategy and a detailed approach for the expected nature, timing, and extent of the audit”. Relying on this description, the mere fact that this phase entails the audit’s scope, objectives, and budget based on the available resources and priorities of the company, planning is basically the “blueprint” of the whole audit program. For this reason, an adequate planning will ensure that appropriate attention is provided to crucial areas of the audit and that potential problems are addressed on a timely basis. With its absence or non-preparation, even if the audit program is viable to perform, it can be (1) costly, since unexpected circumstances may exist as no risk assessment has been made beforehand; (2) lengthy in time, because the absence of the time frame in what should be accomplished in a specific time and date may lead to unknown direction which insinuates the need for extended duration to finish the program; and (3) may instigate unreliable findings, because an unplanned audit will surely produce no value as the results are potentially fabricated.
Meanwhile, the fieldwork phase, which equates to “the execution of the audit program derived from the planning phase” is as significant as the mentioned phase. No matter how well-organized the plan is, it would be all in vain if it is not done the proper way. The University of Texas at Austin (n.d.) listed examples of activities undertaken in this phase such as: interviewing, testing of resources and methodologies, assessing the appropriateness of internal controls, documenting, and carrying out other procedures to cater the audit needs. In other words, the audit team must make every attempt to explain audit observations, issues, suggestions as they are identified and must communicate it regularly to the audit clients to accomplish this phase productively.
If given the chance to perform an operational audit, as cliché as it sounds, I would like to take my chance at SM Retail Inc., a holding company of its parent, the SM Investments Corporation. The reason behind such choice is not directed towards on the fact that they are one of the most profitable retail companies here in the country but because of them being highly impacted by the pandemic. As the malls have been closed, I take this as a challenge to do the audit work in how they devise different approaches, policies, procedures, and operational activities while capitalizing their resources especially in these trying times.
In line with its operational audit checklist, it is adopted from the University of Texas at Austin (n.d.) and listed as follows:
Planning
• Select qualified auditors and staffs
• Undergo risk assessments
• Create audit program
Fieldwork
• Conduct interview
• Review documentation
• Test of resources and methodologies
Reporting
• Provide draft report
• Obtain corrective action plans
• Distribute final report to appropriate individuals
Follow-up
• Conduct interview
• Review new processes and procedures
• Re-audit (if necessary)
References:
Khan, S. (2016). Planning the Audit. Accessed October 9, 2021 https://specialties.bayt.com/en/specialties/q/270635/can-you-explain-the-importance-of-planning-the-audit/
University of Texas at Austin (n.d.). Audit Process. Accessed October 9, 2021 https://audit.utexas.edu/audit-process
Written by:
DEMABILDO, John Michael F., 2019-101694, CBET-01-503A
For me, the most essential aspects are selection and planning, which should never be overlooked. Internal audit meets with leadership and management during the development of the annual audit plan to discuss risks and potential impediments to meeting objectives. Identifying risks and potential impediments is critical because it allows internal audit to develop plans to prevent harmful events from occurring. The goal of this phase is to detect any and all potential threats to internal auditing. Every audit necessitates planning, from defining the scope and goal to creating audit processes to achieve the goal. Internal audit meets with management at the start of the audit to review the audit's goal, risk factors, and other logistics. The planning phase includes management, and the specifics are documented in a planning and scoping memo. Planning assists the auditor in devoting appropriate focus to major areas of the audit, in seeing and resolving possible concerns on a timely basis, and in appropriately organizing and managing the audit engagement so that it is completed in a good and efficient manner.
ReplyDeleteI'd want to work at BDO Unibank, Inc. because it's a fantastic career advancement opportunity, there's a lot to learn, and they occasionally offer openings for secondments between departments with a diverse customer base. Working as an auditor gives one of the best and quickest business educations available. Qualifying as an auditor here is a springboard that will help me to advance in company very far and very quickly. Because of the way I learn to comprehend organizations and think commercially in auditing, I have a good basis for a future in business. Staying in a firm and becoming a partner will be extremely beneficial to me! As a public business auditor, I will have limitless chances to further my education and growth while earning a living. Many public company auditors are overseeing teams and participating in meetings with some of the sharpest corporate leaders in the world after only a few years on the job. Overall, it is an excellent opportunity for freshers.
(1) Initial Audit Planning: All internal audit projects should start with the team clearly knowing why the project was added to the audit plan in the first place. (2) Process and Risk Subject Matter Expertise, such as conducting an audit based on internal business data, is useful in determining the operational efficacy of process controls. External expertise is rapidly becoming a best practice for internal audit to stay up with the business's changing landscape and ensuring essential procedures and controls are also built appropriately. (3) Initial Document Request List, the apparent next step in preparing for an audit is to request and receive documentation on how the process operates. (4) Preparing for a Planning Meeting with Business Stakeholders, Internal audit should have an internal meeting before meeting with business stakeholders to ensure a high-level knowledge of the process or department's objectives and key phases in the process. (5) Preparing the Audit Program, Internal audit will be ready to establish an audit program once they have validated their grasp of the process and hazards within it. (6) Audit Program and Planning Review, before being finished and enabling fieldwork to begin, audit programs, especially those for systems that have never been audited before, should go through many layers of review and buy-in.
White Collar Accountant. (n.d.). Audit Planning, Importance of Planning, Understanding the client. https://whitecollaraccountant.com/audit-planning/
AuditBoard. (n.d.). Audit Checklist: How to Conduct an Audit Step by Step. https://www.auditboard.com/blog/audit-checklist-how-to-conduct-an-audit-step-by-step/
SALAPARE, DARYLL A.
2019-102486
For me, the two phases that is very important and should never be taken for granted are the audit planning and conducting the audit. In this phase of the internal audit, there must be a coordination of an audit plan to the previous data collected which must be benefit to all starting to the firm till the customer’s benefits. The audit plan contains information that is so important for the firm. Objectives, and criteria of the audit are one of the important in operation of the firm and it is belong to the planning phase. Inside this phase, other important information are being tackled also like, the units and areas that has to be audited within the firm, staffing right audit members, knowing priority aspects, inform about time and duration of inspections like dates and locations, planning meeting schedule, keeping confidential requirements and constructing structure and delivery of the final result for report. Next is the conducting the audit. I choose this because this phase of the internal audit must introduce the important team members and introduced the plan that is reviewed. The methodologies and procedures that is being tackled here are very important in order to achieve the firm’s goals and objectives. Also in this phase, the primary resources defined the security and procedures that will be reviewed. All the information collected by the audit team here is gathered, get analyze and assessed so that they will know if their plan and process are cooperated to each other. At this phase, the results are being presented, there will be resolving of disagreement and conclusions must be discussed in order to comply with those objectives of the firm.
ReplyDeleteI want to audit ABS-CBN and Philhealth because we all know that these pandemic, those two commits controversies that is known in whole nation. As an auditor, I want a detailed look at those organization business's operations and evaluates their financial statements, because I want to know why there are corruptions and I want to know what the evidences of those corruptions are. I want to give to the citizen the true reason of fraud that is happened to those both organizations.
As an auditor, I will ensure that the audit is effective by conducting interviews with managers or who are in control of potentially risky areas. Based on the operational problem areas, maybe as an auditor, I can design control-level test procedures. Tests are conducted, the results of which are meticulously documented, to show which new processes or objectives can improve the organization's efficiency. A full tax audit identifies those risks, as well as potential fraud and compliance issues. By reviewing each step of the operational process, the audit can investigate the impact of each change on internal control. In short, as an auditor, I will pull together reference and evidence documents, Identify administrative support, research procedures of operations; I will audit evidence from all collected sources and evaluate evidences, compile audit findings and audit conclusions, and give actionable advice to ensure that the audit is efficient and effective.
Calle Juan Pablo (2020) Stages and phases of internal audit; retrieved from: https://www.piranirisk.com/blog/stages-and-phases-of-internal-audit
What is an operational audit? (n,d) retrieved from: https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
-Dugay, Bernadeth (2019-103892)
1. We are all aware that all of the phases of an operational audit are important. They have their role and purposes that one phase or another cannot cover. But I think these three phases: selection, planning, and execution, are very important and should never be taken for granted.
ReplyDeleteThe selection phase and planning phase is the most important part of an audit process. It entails the understanding of the operations objectives, processes, risks, opportunities, and controls. It establishes the scope and objectives of the audit, determines the resources required and target dates, identifies the evidence required to develop the audit plan and program, chooses the right audit procedures by determining the key performance indicators, and evaluate the documents to assess the relevance, significance, suitability and other factors affecting the conduct of the audit.
The execution phase is where the audit plans will be executed: it involves an entrance conference to obtain the expectations and views for the overall framework of the execution, a compliance audit to evaluate whether the objectives of the company comply with the law, a system/process audit; documentation of the process or system under audit, identification of the control procedures, and verification and validation on whether or not such control procedures are complied with and are working effectively, and an exit conference, where it will discuss the highlights of the audit findings to give opportunity for insights and comments about the significant audit issues as a way of validating the findings.
These phases play a crucial role in the process of operational auditing that should never be taken for granted because the success of auditing depends on how it will be constructed and conducted.
2. If I were given a chance to audit a company, I would like to audit the Philippine Long Distance Telephone Company (PLDT). As the leading telecommunications and internet service provider in the Philippines, I think PLDT should improve its services, especially since it has a significant role in our society amidst of pandemic where people communicate through technological devices and needs a stable internet.
3. Operational Audit Checklist
1. Selection, Planning, and Notification
• Document understanding of the program and project
• Determine the audit objective, scope, and criteria, and audit evidence
• Determine the resource required for the audit and the target milestone/dates
• Develop the audit plan and audit program
• Determine the Key Performance Indicators (KPIs) of the audit engagement
• Secure approval of the audit plan and audit work program and KPIs
2. Audit Execution
• Entrance Conference
• Auditee Meetings
• Audit Program
• Scope Meeting
• Fieldwork
• Audit Findings
• Draft Audit Report
• Exit Conference
3. Reporting Phase
• Departmental Responses and Plans of Action
• Distribution of Final Audit Report
• Post Audit Evaluation
4. Audit Follow-up
This is a simple operational audit checklist of procedures made by The University of Mississippi- Office of Internal Audit. I sort it according to the steps of the 5 operational audit phases and analyze each step to guarantee that it will be effective to be a guideline in auditing PLDT.
References:
About PLDT - PLDT Inc. (n.d.). PLDT CORPORATE OFFICE. Retrieved October 17, 2021, from https://pldt.com/about-us
Audit Process. (2016, August 15). The University of Mississippi - Office of Internal Audit. Retrieved October 16, 2021, from https://internalaudit.olemiss.edu/audit-process/
TWD-IC-Manual-Part-II-II.-Audit-Process. (n.d.). Tanauanwd.Gov.Ph. Retrieved October 17, 2021, from http://www.tanauanwd.gov.ph/wp-content/uploads/2016/04/TWD-IC-Manual-Part-II-II.-Audit-Process.pdf
JANINE LOUISE S. ERRUA
2019-103959
1. Operational audit investigates thoroughly the management practices to determine all the inadequacy and possible improvements in the processes, systems, and procedures of an organization (Murdock, 2017). As stated, operational audit investigates, it means that the auditor need to follow a procedure to conduct an investigation to come up with an effective, efficient, reliable, and competent findings.
ReplyDeleteThe Operational Audit consists of four phases: planning, fieldwork, reporting, and follow-up. These phases are crucial in operational auditing, however, from my perspective, auditors should give high-priority to planning and reporting.
In general, before we do something like work, activities, or even how we start and spend our day, we are planning, because planning gave us the guidance on how we can get the work done by optimizing the given resources. It is also the same in operational auditing, ahead of performing the audit, planning is a significant procedure. It allows the auditor to set his objectives in doing the work, since having an ambiguous objectives are just wasting his resources because it is not clear in his mind what he is aiming for.
As reporting is the main objective of operational auditing, it is one of the most important in the four phases. The findings in performing the audit will be worthless if it is not reported or communicated. How should an entity provide a corrective action, if the operational audit was not discussed with them? How should they know the things that are need for improvements, if the loopholes in their processes, systems, and procedures were not communicated to them? That is why auditor should report the findings, accurately and objectively, so the entity can provide possible improvements.
MANALAC, ERICKA
2015-100842
1/3
2. If I will be given a chance to audit one of the company in the Philippines, it will be Jollibee Food Corporation. JFC started on 1975 when the Tan Family opened an ice cream parlors in Cubao and Quiapo, which were the first Jollibee outlets. And last 2018 they celebrated their 40th year of anniversary. I want to examine the processes, systems, and procedures of the JFC, because they reached a milestone, from two ice cream parlors to more than 1000 stores in and outside of the Philippines. Even JFC is already a well-known company, I believed that there is always a room for improvement that will benefit its owners, stakeholders, employees, organization itself, and its consumer.
ReplyDeleteMANALAC, ERICKA
2015-100842
2/3
3. PLAN:
ReplyDelete* Objective of the engagement
* Budget for the engagement
* Schedule of meetings
* Risk Assessments
DO:
* Test of Activities
* Review of Transactions
* Observe Activities
* Collect evidences
* Document the evidences collected
CHECK:
* Verify the transactions
* Findings
* Corrective Action to be suggested
ACT:
* Follow-Up activities
References:
Eby, K. (n.d.). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
J. (2019). Jollibee Foods Corporation -. Jollibee Foods Corporation. https://www.jollibee.com.ph/
Murdock, H. (2016). Operational Auditing: Principles and Techniques for a Changing World (Internal Audit and IT Audit) (1st ed.). Auerbach Publications.
MANALAC, ERICKA
2015-100842
3/3
OF ALL THE PHASES OF OPERATIONS AUDIT, LIST AT LEAST TWO PHASES THAT YOU THINK ARE VERY IMPORTANT AND SHOULD NEVER BE TAKEN FOR GRANTED
ReplyDeleteDuring the first week, we have learned of the definition of Operational Auditing and its functions, how it differs from the other fields of auditing, the skills required to become an operations auditor and he significance of operational auditing in assessing the overall operations of the management. In the second week, we were able to discuss the different phases in auditing and how each phase is relevant in an internal audit. Undoubtedly, each phase is essential to produce a comprehensive audit. These phases are interconnected, hence, a need to follow audit phases accordingly before proceeding to the next phase. However, two of the phases mentioned in the previous activities are crucial in an internal audit and should not be taken for granted and these are: Planning phase and the Execution (Fieldwork) phase.
The planning phase is the most important phase of an audit cycle. During this phase, the audit is planned in line with the very aim of the audit and setting criteria that best suite to arrive at the aim (Ramachandran and Vaidya,n.d). It primarily consists of planning everything prepared in advanced by the involved parties including the auditors and audit program managers. Additionally, planning includes. Establishing audit strategies for the management and developing audit plans, determining planned risk assessment procedures and planned responses to the risk of materials mistatement On the other hand, the selection phase is the testing and evaluation phase. This phase assesses the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. Also, the clients are kept inform of the audit process through regular meetings, discuss audit observations, potential findings and recommendations with the clients as they are identified
Both the planning and fieldwork phase are crucial in an internal audit. Executing plans without having any audit plans would mean taking the risks at all costs as such conducting subsubsequent audits without knowing the feedbacks of the clients would be useless.
PIOLIN, RICKA MAE B
2019-10805
THE SPECIFIC AREAS OF SCRUTINY IN OPERATIONA AUDIT WILL DEPEND ON THE TYPE OF BUSINESS BEING AUDITED. CHOOS ATLEAST ONE (1) COMPANY IN THE PHILIPPINES YOU WOULD LIKE TO AUDIT AND WHY
ReplyDeleteThe company that I would like to audit is the TAMICO . As their scholar, I would love to be a witness of how well-planned are the policies they are implementing as part of their management control and the necessary actions they take when adversities arise. I would like to be a part of the growing company who is not just responsible with their employees but more importantly their stakeholders. TMC is responsible with helping the employees as well as the community providing community services and the like. As they have signed an agreement extending their contract for additional years of operation, I would like to see what policies are they going to implement for the improvement and success of its operations. As an internal auditor, we are working independently to provide credible and significant services to the company. We aim of producing a comprehensive audit that would evaluate the past operations and the current operations of the company which could lead to a better audit findings.
OF THE CHOSEN COMPANY YOU WANT TO AUDIT IN NUMBER 2 ABOVE, PROVIDE AN OPERATIONAL AUDIT CHECKIT PROCEDURES TO ENSURE THAT AUDIT IS EFFECTIVE
In order to ensure that the audit will be effective, the following checklist provided by Eby (2017) will be applied. The checklist is divided into five (5) primary actions: Plan, Do, Audit, Check and Act.
PLAN
�� Select competent auditors
�� Screen Auditees
�� Define audit plans and procedures
�� Define purpose and scope
DO
�� Reference documents
�� Identify administrative and infrastructure support
�� Collect information
AUDIT
�� Audit evidences
CHECK
�� Evaluate against criteria
�� Audit findings
�� Review findings
ACT
�� Present report with conclusions and actionable information
�� Follow-up to answer questions or concerns
�� Follow-up audit
REFERENCES:
Ramachandran, Abhilash and Vaidya, Dheeraj (n. d). “What is the Audit Cycle?”. Retrieved 13 October 2021 04:45 pm from https://www.wallstreetmojo.com/audit-cycle/
Eby, Kate (2017). Operational Audits 101: Processes, Examples and Checklists. Retrieved 16 October 2021 4:30 pm from https://www.smartsheet.com/operational-audit-process?amp
Grabillo, M.A (2021). Operational Audit: What are its Phases?. Retrieved 16 October 2021 1:30pm from https://magrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases-html
PIOLIN, RICKA MAE B
2019-101805
(1/2)
ReplyDelete1) Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
We can't deny that all of the phases are important in executing an Operational Audit. But if i will be asked what are the two phases that are most important in the audit-phase process and should never be taken for granted, i will answer, the Planning Phase and the Follow-up Phase. I believe that these two phases are the backbone of the audit process.
In planning phase, it actually tackles everything that will be addressed in the course of audit. If there's no planning phase, other phases will be ineffective. If planning phase is successful, we can assure that the audit process will be successful. In planning phase, auditors prepare the overall viable audit strategy, guidelines, and scope to be followed in conducting an audit. Auditors should first have solid and strong understanding of the business and industry of the client. As to the client’s accounting systems and policies, internal controls and procedures to be coordinated to the audit to be performed. Then, auditors will decide in advance what is to be done, who is to do it, how it is to be done, where it is to be done, and when it is to be done. The auditors plan the extent of direction, supervision of team members, the nature, timing, and review of the audit. Planning is very important in order to have efficient and effective completion of the audit. It helps keep audit costs at a reasonable level, identify problems, reduce audit risks, accomplish objectives and complete the audit effectively within the specified time. Audit plans enhances the quality of the audit work. Audit plans should also be flexible so that they can be developed or revised as when it is needed.
While in follow up phase, many still take it for granted, which in fact, follow up phase is also a vital phase of an audit process. It serves as the evaluation of what has been done in the course of audit. It is where we evaluate the adequacy, and effectiveness of actions taken in the course of audit. It is where we monitor the disposition of audit findings and results and the implementation of the recommendations. The follow up phase must not occur at the time of the end of the building measure and certainly not at the end of the usage process, but is a component of a continuous, alternating improvement process (Bauhelp.Ch, n.d.). Follow up phase gives as assurance that action plans have been effectively implemented and that audit taking will be successfully completed.
Reference:
Bauhelp.Ch. (n.d.). The follow-up check monitors the agreed measures. Retrieved October 15, 2021 from https://bauhelp.ch/construction-auditing/follow-up-check
— KRYSTAL VIEN T. LADAO (2019-106903)
(2/2)
ReplyDelete2) The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
The company that i would like to audit is the San Miguel Corporation. It is the Philippines' largest diversified conglomerate. With its growing ability to participate in many of the country’s growth sectors, San Miguel Corporation always believed that economic growth and social progress go together and as such, has taken an active role in nation-building (World We Want, n.d.).
San Miguel Corporation is one of the successful and trusted companies in the Philippines. Their major objectives arejob creation, creating new cities, teaching essential livelihood skills, and building homes. I want to audit these kind of corporation that driven not just by profit but by a sense of purpose and renewal. I want to support this kind company and to be a good example to others. San Miguel Corporation's track record is no accident, but the result of a clear strategy that the company has steadily pursued to achieve growth and create positive impact (World We Want, n.d.).
3) Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
To ensure that the course of audit is effective and efficient, the operational audit checklist of procedures that we need to follow are:
(1) Establish overall viable audit plans, strategies, guidelines and scope.
(2) Screen and appoint effective and applicable audit team members.
(3) Establish administrative support.
(4) Examine the client's business background information, accounting systems and policies, internal controls and procedures.
(5) Collect and evaluate reference documents and statistical evidences.
(6) Execute the planned audit strategies.
(7) Compile audit findings and results.
(8) Report audit findings, results, and conclusions.
(9) Provide actionable advices and recommendations.
(10) Follow up evaluation of the audit results and recommendations.
Reference:
World We Want. (n.d.). Inclusive progress is at the heart of San Miguel's purpose. Retrieved October 14, 2021 from https://worldwewant.ph/stories/inclusive-progress-is-at-the-heart-of-san-miguel-s-purpose
— KRYSTAL VIEN T. LADAO (2019-106903)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteOperational auditing helps in evaluating the day – to – day operations of a business to ensure that it is running effectively and efficiently. In order to make this happen, it follows four phases. These phases are Planning, Fieldwork, Reporting, and Follow-up phases. Each of the phases of operational audit are important as each of them serves different purpose in achieving the best possible outcome of audit. They are also prerequisites of one another, as one cannot function well when one has been neglected and taken for granted. However, if I were to personally choose the two phases that I think are the most important and should never take for granted among the four phases, I would pick out the Planning phase and Follow – up phase. These two are the first and final phases.
Planning is significantly needed in starting a project or work. In this phase, the operational auditor will meet the clients, identify the problems, and form engagement with team members at the same time testing their levels of capabilities and competence. It includes the timing and scope of audit procedures that the team needs to perform in order to attain enough and appropriate evidence for audit to reduce the potential risk that could impact the business. Also, planning can set a specific guideline to be followed in conducting audit that can help the auditing run smoothly and with direction. As a result, auditors can focus on specific plans set in the time frame.
On the other hand, the follow – up phase is also important. As in this phase is when the auditor checks if the planned actions and recommendations provided were implemented by the management. Aside from checking if recommendations were implemented, it also gave the auditor the chance to see if the issues were addressed and actions worked as intended.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I were to choose a company that I would like to perform an operational audit, it would be the San Miguel Corporation (SMC). San Miguel Corporation is known for its beverages, food, packaging, fuel, and oil, power, and infrastructure. It is described as Southeast Asia’s oldest and largest brewer and one of the Philippines’ largest and most diversified conglomerates. I have always been curious on how long this company has been running and making projects to help. I like that they have the whistle – blowing policy which encourages employees to speak out and call the attention of management to any wrongdoing and communicate concerns regarding their accounting and auditing. They also have a charter for internal audit, and an audit and risk oversight committee. As an operational auditor, it is good to know that they have these policies and charters. Which implies that they are open and willing to listen to any recommendations that I can comfortably suggest and communicate to them.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
To ensure that the operational audit that I will perform for San Miguel Corporation is effective, the checklist of procedures that I will provide will include: Selecting and screening auditors, understand the audit plans and its scope, gather relevant documents, identify the issues and risks, collect and evaluate evidences, compile the findings, share findings and give recommendations, and do follow up report.
References:
San Miguel Corporation. (n.d.). Company’s Policies. https://www.sanmiguel.com.ph/page/company-policy
SAYSON, MARVIE JAY N.(2019-100731)
How & Who to Audit?
ReplyDelete1. In previous week, we studied and discussed what is operational auditing were. What its charateristics and importance. What traits must an operational auditor have to conduct a review about the company's operations. Now, we moved on to the topic which talks about the phases of operational auditing that composed of planning, fieldwork, reporting, and follow-up. All these phases are essential in the audit process. I believe that each has a key role to make this process successful but two of them is in another level and very important which should never be taken for granted. These are planning and fieldwork.
In planning phase, audit objectives are defined and audit methodology is determined through the creation of an audit program, which is the blueprint for conducting the audit and accomplishing the audit objectives. In most cases, a risk assessment of the department and/or function will be performed to help ensure that appropriate areas are included. Planning is the most important part of auditing because it involves scoping, budgeting, defining the interested population, how investigations will be performed, and announcing the audit (Murdock, 2017). Audit process will never be conducted without planning how to do it. Eisenhower's words—"Plans are worthless, but planning is everything"—the value of audit planning is not derived solely from the resulting audit plan. The real benefit of audit planning is gained from the process itself.
Next is fieldwork which is the evaluating phase of the audit. This phase includes assessing the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. This is the stage where gathering evidence occur such by conducting interview to accomplish audit objectives which is very essential because this will result for the operational auditors to come up or to derived reports which can help them construct solutions and recommendations to the management for the further improvement of the organization.
Dela Cruz, Joyce Ann N. (2019-105673)
ReplyDeleteHow & Who to Audit?
1. In previous week, we studied and discussed what is operational auditing were. What its charateristics and importance. What traits must an operational auditor have to conduct a review about the company's operations. Now, we moved on to the topic which talks about the phases of operational auditing that composed of planning, fieldwork, reporting, and follow-up. All these phases are essential in the audit process. I believe that each has a key role to make this process successful but two of them is in another level and very important which should never be taken for granted. These are planning and fieldwork.
In planning phase, audit objectives are defined and audit methodology is determined through the creation of an audit program, which is the blueprint for conducting the audit and accomplishing the audit objectives. In most cases, a risk assessment of the department and/or function will be performed to help ensure that appropriate areas are included. Planning is the most important part of auditing because it involves scoping, budgeting, defining the interested population, how investigations will be performed, and announcing the audit (Murdock, 2017). Audit process will never be conducted without planning how to do it. Eisenhower's words—"Plans are worthless, but planning is everything"—the value of audit planning is not derived solely from the resulting audit plan. The real benefit of audit planning is gained from the process itself.
Next is fieldwork which is the evaluating phase of the audit. This phase includes assessing the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. This is the stage where gathering evidence occur such by conducting interview to accomplish audit objectives which is very essential because this will result for the operational auditors to come up or to derived reports which can help them construct solutions and recommendations to the management for the further improvement of the organization.
Phillippine Health Insurance Corporation or commonly known as PhilHealth, a tax-exempt, government-owned and government-controlled corporation (GOCC) of the Philippines, and is attached to the Department of Health which covers the universal health coverage of the country. This corporations is undergoing controversies in the last few months because of the disappeared like buble- 15 billion fund. Due to this, it is indeed an opportunity for me to examine and review this company's financial records and operations for me to know what happened to the fund that is supposed to help millions of Filipino people especially healthworkers in this time of pandemic and correct any wrong doings related on their operations. I would based my operational audit checklist of procedures from Eby in PDCA (2017) to ensure that audit is effective. These are: Plan which include selecting competent auditors, screen auditees, define audit plans and procedures, purpose and scope; Do - referencing documents, identifying administrative and infrastructure support, collecting information; Audit, Audit Evidence; Check: to evaluate against criteria, audit and review finding; and lastly, Act which involves presenting reports with conclusions and actionable information, follow-up to answer questions or concerns and audit.
ReplyDeleteIn conclusion, as Kandarpa explains, checklists vary in every company based on their purpose, audit type, and audit criteria. However, the audit process and auditing principles remain constant. These checklists will guide operational auditors on doing an audit successfully and may be useful in gathering information which can help the management and stakeholders be informed about the overall operations of the organization.
References:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. CRC Press
Gartland, D. (2017). The Importance Of Audit Planning. Journal of Accountancy. https://www.journalofaccountancy.com/issues/2017/sep/importance-of-audit-planning.html
Office of Internal Audits (2021). Audit Process. The University of Texas at Austin. Accessed 17 October 2021. https://audit.utexas.edu/audit-process#:~:text=The%20evaluation%20phase%20of%20the,the%20objectives%20of%20the%20a
- Dela Cruz, Joyce Ann N. (2019-105673)
When one has been wanting to hike in a mountain, at a place he is not familiar to, he shall prepare things that would help him reach his destination. If he were to hike, without the right gear, for instance, a GPS, a map, or a compass, he would probably get lost and wouldn't be able to know which way he is supposed to turn. In a way that a fully equipped man, would be reaching his desired station, properly laid plans also help us accomplish our objectives. In every aspect, processes help us gain a broader perspective of what's on the line. I believe that planning activities and assessing the situations ahead of time contribute tremendously into the success of an operation. In planning, initial actions and suggestive propositions are laid down, covering assumed risks and threats. Accordingly, a proper plan does not only focus of what might happen along the way, but also encompasses the deals if the initial plan fails. The thing with plans is that it would never progress as we please, for there are circumstances that are out of our control. However, the operation does not solely focus on planning. Plans, no matter how perfectly aligned, an appropriate follow-up is always necessary. There would be instances that we would make last-minute changes or adjustments. It is only sensible for us to examine and evaluate performed actions, in order to render a sound judgment of the overall operation. In conclusion, planning in advance best helps us when we come to grips with unexpected conditions that might hinder our operation. In addition, as I've said above, after executing the plan, it is vital for us auditors to weigh up and analyze if alternative plans are executed properly.
ReplyDeleteSince I had previous relationships with Jollibee Foods Corporation, if I were to choose one company here in the Philippines, I would gladly take the chance to audit them. Prior to college, I had the opportunity to work at Jollibee, Angat, Bulacan Branch. It was a fun experience, and it was my first formal job, that I actually need to apply to. I observed their desire to achieve their daily quota, the importance of adhering to their guidelines, and the nervousness the faces of the crew spits out, when an auditor is expected to arrive any second. Sadly, I wasn't able to witness their relief once the auditor is finished inspecting. Frankly, I was never a fan of Jollibee. I grew up patronizing the products that McDonald's offer, and with a grimace, tease those who love Jollibee's. However, I had learned to love Jollibee. I admired the dedication of the employees, and different benefits they provide to drive their staff to do better. Aside from their offered products, I now understand why do people choose them among other fast-food chains. Recently, there has been an issue regarding an uncommon error from a branch of Jollibee. They mistakenly served a towel instead of a fried chicken, and that stirred up people. In this case, I chose Jollibee Foods Corporation, for I want to prevent events similar to the one I've stated, and it would bring me much joy if I were to be involved in their operation again. In relation to auditing Jollibee, for my goal to be possible, I shall review previous audits in related to them, and this would somehow help me assume what position the company is. I would then scan the overall operation, if they are up to standards, gather information proving their procedures. After gathering all needed information, I must evaluate and examine sources, to come up with a finding. To finish it up, findings shall be reported or shared to the respective employees, and conclude corrective actions need to be taken. After all the said process, it would be advisable to let them take the floor and allow them to raise their concerns.
REFERENCE:
Accountants Go Cardless. (n.d.). What is an Operational Audit? Retrieved October 17, 2021 from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
POBLACION, KIRSTEN GAVEN R. (2019-104425)
It seems to me that the two (2) most important audit phases are the first two: planning and risk assessment, and fieldwork – project based work. As Hall, C. (2018) stated in his article Audit Risk Assessment: The Why and The How, which if we wish for efficiency effectiveness, and profit, risk assessment will be our best friend. The author’s reason for that is first, to create a plan, an auditor must: have an understanding of the environment of the entity an auditor will audit; understand transaction level controls; identify fraud risks; and lastly creating the risk picture. With the risk picture the risk assessment ended, and through the risk picture, the auditor may control weaknesses, identify entity risk characteristics, theft occurrences, etc. which will be crucial to create the audit plan. As for the fieldwork, based on my personal opinion, is the most crucial and important, because as I think of it, the rest of the phase will rely on the evidences, documents etc. that gathered on fieldwork. Planning will rely on those evidences if the original plan can still be carried out or needs adjustments or improvements. Reporting will rely on those evidences because it is the fact and should be faithfully represented, and of course as well as for the follow up monitoring as you will still documents or evidences as proof that everything does not violate the professional standards.
ReplyDeleteI honestly don’t have any deep reasons for choosing this company, but I would like to audit San Miguel Corporation. What I thought is that, since it is a big corporation, it would be an honor to work there as an auditor. I also wonder how they survive and still surviving since the pandemic. I thought that although they are big corporations, I want to know what their struggles are and how they handle it.
The general procedure of an operational audit starts from the pre-audit meeting where the auditor and the management team come together to gather relevant information as well as the auditor will explain thoroughly to the management team the auditing process. Then the auditor will discuss the possible risky areas to the managers to be able to control it. The activities and objectives are documented for the management team to confirm it. The auditor then will design the testing procedures at control level, and the results will be documented meticulously to identify which areas to improve for the organizations efficiency. Lastly, the auditor writes up a comprehensive audit report with recommendation, then finalize everything together with the management. Now for the operational checklist of procedures for better flow: (1) select and screen auditors; (2) define audit plans and scope; (3) pull together reference document; (4) identify administrative support; (5) research operational procedure; (6) collect statistical evidence; (7) audit evidence from all sources; (8) evaluate evidence; (9) compile audit findings; (10) share audit conclusions; (11) give actionable advice; and lastly (12) follow up with questions and concerns. Through that checklist the auditor’s audit report will provide the business objective overview of the San Miguel Corporation operations, and yield new insights.
References:
GoCardless Ltd. What is an operational audit?. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Hall, C. (2018). Audit Risk Assessment: The Why and The How. https://cpahalltalk.com/audit-risk-assessment/#comments
- DE LOS SANTOS, FEBVIE ROSE C. 2019-103240
Part 1
ReplyDelete1. In the second chapter of Hernan Murdock’s Operational Auditing, he stated that operational audit’s life cycle has three phases: planning, fieldwork, and reporting. These phases have an impact on the achievement of the objectives of the operational audit. The planning, fieldwork, and reporting phases provide a simple, effective, and time-tested approach to organizing, performing, and communicating the results of the work done (Murdock, 2017).
In my opinion, the two phases of audits that should not be taken for granted are planning and fieldwork. Planning is the most important phase because it entails identifying risk areas, setting up suitable channels, saving time, allocating resources, defining scope and nature, and cutting expenses. The existence of a clear audit program will help internal auditors to have an efficient audit process as this will act as a guide on how they will conduct their audit. Without planning, the auditing process will surely fail for the reason that internal auditors will conduct unnecessary reviews, gather documents, and evaluate procedures that are irrelevant to the objectives of an operational audit. The second most important phase is the fieldwork. According to Murdock (2017), fieldwork consists of two things: determining if the process or program under review is designed effectively so that the related goals and objectives are likely to be achieved; and verifying that the controls in place are performing as designed by management. In this phase, internal auditors assess the competence of internal controls and compliance, analysis of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. Auditors should closely pay attention to these phases as they serve as the foundation of the third phase of the operational audit, which is the reporting. The conclusions, and recommendations or any corrective actions that will be communicated to the process owners and other relevant stake holders will be based on the internal auditor’s observation from the other two phases.
2. No matter which administration, corruption in construction is prevalent. I want to audit the contractors of the BBB Program of the current administration. This is because it has the largest portion of the 2021 National Budget. According to Rey Gamboa of the Philippine Star (2020),
"The Philippine Center for Investigative Journalism (PCIJ) published in 2018 a list of contractors that continue to receive contracts for major BBB projects in spite of findings of fraud, corruption, and even having served time on the Department of Public Works and Highways’ blacklist."
I think it is important to perform an operational audit of these contractors because the Build, Build, Build Program was prioritized over healthcare and education in times of the pandemic. As we all know, the program involves the National Budget. Hence, contractors and the government should be transparent in their transactions and be held accountable for their actions. As a Filipino auditor, I want to make sure that the government funds are put to the right use and not in the pockets of those who are in power, and that they are used for the benefit of our nation.
ROGELIO, JAN LORRAINE M. (2019-105301)
Part 2
ReplyDelete3. Provided below is the Operational Audit checklist based on Eby (2021) that I will be using in auditing the contractors of the BBB Program:
4. Select competent auditors.
5. Screen the auditor.
6. Define the audit strategy and procedures.
7. Define the purpose and scope.
8. Documents of Reference
9. Determine the administrative infrastructure and support required.
10. Gather information
11. Evidence from an Audit
12. Compare to the criteria
13. Findings from an Audit Finding
14. Review the findings.
References:
Eby, K. (2021, July 19). All About Operational Audit. Smartsheet, https://www.smartsheet.com/operational-audit-process
Gamboa, R. (2020, January 14). Corruption in construction projects still prevails. The Philippine Star, https://www.philstar.com/business/2020/01/14/1984522/corruption-in-construction-projects-remains-a-problem
H. Murdock (2017).Operational Auditing: The Principles and Techniques for a Changing World Boca Raton: CRC Press.
ROGELIO, JAN LORRAINE M. (2019-105301)
1. Operational auditing guarantees that a company's operations are efficient and effective. They take a thorough and in-depth look at the situation at hand and come up with a viable solution. Operational Auditors help to keep the business running smoothly. They have operational auditing phases that they follow to ensure that those goals can be met: selection, planning, execution, reporting, and follow-up. Every phase is critical, but Selection and Planning are the two that I believe are the most critical and cannot be overlooked. Retracing historical action in a company can easily identify an issue, but evaluating the risk is a different story. The internal auditor conducts the risk evaluation during the selection phase. It's an important stage because if the risk is underestimated or ignored, it can lead to significant adjustments or even the failure of a company. Planning is also crucial because it is here that you collect all of the evidence that will support your risk assessment, planning, or solution. You should not take this lightly because it identifies the audit's objectives, scope, as well as the fieldwork and report distribution dates.
ReplyDelete2. Nestle Philippines is the company I'd like to audit if I had the option to audit one firm in the Philippines. My previous lecturers frequently tell me about Nestle Philippines because they used to work there and had a positive view of it. Nestlé Philippines, Inc. (NPI) is a strong and stable firm that is proud of its role in providing Filipino consumers with the greatest food and beverages. From there, I'd like to know how they keep their company stable, how they conduct business, and what policies they have in place.
3. The operational audit checklist differs each firm, according to what I've learned, because it is defined by the type of the business and the scope of the audit. Furthermore, in order to ensure the effectiveness of an audit, the auditor must design, organize, and plan an operational audit checklist to aid in the company examination. The following steps will guide you through the process of creating a successful or effective audit. To begin, we must pick and screen auditors, create audit plans and scope, gather reference documents, identify administrative support, conduct research, develop operational processes, obtain statistical data, audit evidence from all sources, and analyze the evidence. After that, compile audit findings, present and discuss conclusions, provide actionable advice, and answer to queries and concerns. (GoCardless, n.d.)
Reference:
GoCardless. (n.d.). What Is an Operational Audit? Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Murdock, H. (2017). Operational Auditing Principles and Techniques for a Changing World. Taylor & Francis group.
Operational auditing is defined as the process of evaluating a company's operating activities – both on a day-to-day and broader scale. Furthermore, by auditing the company's internal policies and procedures, the company can identify problem areas and operate more efficiently. Given the information mentioned above, efficiently finishing auditing is impossible unless certain phases are followed. After reading "Operational Audit: What Are the Phases?" Although all of the stages are important, the auditing flow will disrupt if one has circumvented, and the business operations' efficiency will be compromised. However, in my opinion, the two phases are more important than the others: planning and execution. My professor in Operational Auditing, Mark Anthony Grabillo, once said, “Audits without a plan is like playing without a goal.” The importance of planning cannot be taken for granted for an organization or even an individual, as unsystematic planning would result in pandemonium. A final decision can be analyzed from various perspectives and has the potential to result in an equal number of outcomes. This outcome cannot attain if no execution. As Steve Jobs once said, “To me, ideas are worth nothing unless executed ... Execution is worth millions.” To execute implies power. It means having the ultimate control over something. Without the ability to execute, how would anything get done?
ReplyDeleteDue to its intricate statistics, it appears to me that a company like San Miguel Corporation is suitable for auditing. As the SanMig Corporation is well known to be a conglomerate, its business operations are undoubtedly complex; however, as an auditor, improving through the analysis of managerial, administrative, and operational aspects is beneficial. Use the audit's understanding and insight to aid in the development of strategies to propel the business forward. Making necessary changes to the processes and making decisions about potential risks and the efficiency of operations is a fulfilling role for an auditor, especially if the clients are large businesses or corporations. I am very impressed with their objectives that have been achieved, and this makes me wonder, “How does it feel to audit such a company?”
"The most widely used tools are the plan-do-check-act or Deming Cycle, which the auditor uses in their auditing activities," Kandarpa says. Organizations should conduct audits regularly to support continuous improvement and to monitor the progress of quality measures recommended in previous audits. The checklist of procedures that auditing must complete ensuring quality and continuous improvement based on the PDCA Cycle is provided below.
Planning:
1. Select Competent Auditors
2. Screen Auditees
3. Establishing the Audit Program Objectives
4. Establish the Audit program
Do:
1. Reference Documents
2. Identify Administrative and Infrastructure Support
3. Collect Information
4. Implementing the Audit Program
Check:
1. Evaluate Against Criteria
2. Audit Findings
3. Review Findings
Act:
1. Present Report with Conclusions and Actionable Information
2. A Follow-up to Answer Questions or Concerns
3. Follow-up Audit.
As a result of reading the assigned topic, I discovered that auditing is more than just evaluating an organization's operations and reporting the results, but rather a systematic approach. It follows a set of phases to ensure that the auditing is carried out correctly and a checklist to ensure that everything has been settled or accomplished and nothing has been overlooked. With this information, when I work as an auditor and practice auditing in the future, I will have a great guide to work competently.
References:
Wandering CPA. (2021). Operational audit: What are its phases? GLIMPSE OF A CPA'S MIND. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html?m=1
Kate Eby. (2017). Operational audits 101: Processes, examples, and checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
-ARABIT, PRINCESS MAE D. (2019-103719)
In Hernan Murdock’s book, he listed the phases of the Operational Audit which consists of: Planning; Fieldwork; Reporting; and Follow-Up. The first (1st) phase is Planning, this is the phase wherein the questions that we need to answer is what are our own main goal/s or objective/s and how can we achieve and have a clear vision in making this objective a reality. Since it is the first phase, we should be careful in determining our actions because once we are careless here then the next phases will not ensure the success of an entity. Poor planning could lead to an inefficient auditing practice and increase the possibility of having more risks. More risks mean more time in mitigating it and having more time in this aspect could cut the time needed in others. In business, there are many activities and we should not only focus in one because once we do, we will not become efficient and being inefficient is not the main purpose of operational audit. Second is Fieldwork, here we verify if what we plan will achieve our goals. We gather evidence to support if our work is successful or not. If it’s a success then we can go to the next phase, if not then we need to evaluate the one we plan before and see if we can change or improve something. Next phase is Reporting, in this phase we communicate to all of the stakeholders and discuss all our findings, observations and objective opinions and recommendations to them. Lastly the Follow-up phase, in here we verify if the actions are being performed properly and correctly. For me, all of them has its own or unique purpose yet each phases correlate from each other. In short, all of the phases are important and should not be taken for granted.
ReplyDeleteThe Company that I want to audit as of now is the Philippine Health Insurance Corporation (Philhealth). As we all know all the employees or workers are required to be a member of this entity and this is one of the benefits that is given by a company to ensure that their employees and workers can enjoy sickness and hospitalization benefits. This benefit is needed especially right now that we are facing the pandemic which is subject to our health. I want to know if the employers and employees have been allocating the budget properly and using it for the safety of the members of the society. I want to ensure if this company is following the rules and regulations that was given to them. We need to be careful in auditing this kind of firm because it impacts the general public it means that all the people here in the Philippines are being affected even if there is a slight problem, they should be transparent with it.
I’ll probably follow the list that is provided by gocardless.com, I believe that they give us a list wherein all of them are needed and it should not reduce its numbers. For me, following these can ensure the transparency as well as the accountability of the company. Knowing what is happening inside a firm will make us trust them that they know what they are doing and assure us that the money they are allocating is safe.
References:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
(n.d.). Retrieved October 16, 2021, from https://www.philhealth.gov.ph/about_us/mandate.php
GoCardless. (n.d.). What Is an Operational Audit? Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
- Cancino, Jovin E. (2019-106913)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteOperational auditing is a systematic and very extensive task for auditors, which is why auditors needed to follow the auditing phases to successfully execute the plan. However, in my opinion, the planning and follow-up phases of the auditing process are the most important. Why? When performing an operational audit, the planning stage may necessarily involve too much preparation. The audit plan serves as the foundation for the entire evaluation, but a plan without action is meaningless. But, in my opinion, it is the audit plan that will play the most important role because it will test all of the possibilities and risks that will arise during the audit process until it is successful. The plan's goal is to be successful, which is why all of the necessary areas should be determined and understood during the planning stage, so that when the next phase is performed, the following actions will still adhere to the plan and its goal. The plan should be future-oriented, with backup plans in place in the event of a failure during the execution phase. Although the execution phase should not also be taken for granted, I believe they are inextricably linked and should be treated as a two-way process. Another consideration is the follow-up phase. It is crucial in the entire process because it is the time when the findings are reported the management and auditors to verify that the corrective actions are in fact applied and the problems fixed as expected. According to (Murdock, 2017), a follow-up review means that the auditor is checking to make sure the corrective action was performed, so it consists of checking what management did to address the issue reported. In cases where the severity of the observation was low, and the corrective action was administrative in nature, a review of the item may suffice to close the observation in the findings database. As a result, the follow-up phase should not be overlooked. It is a meeting of the minds between the auditor, the findings, and the company to ensure that there will be improvements in the company's internal policies and new risk-assessment strategies.
References
Murdock, H. (2017). Operational Auditing: The Principles and Techniques for a Changing World. CRC Press Taylor & Francis Group . Retrieved October 16, 2021
-PALACIO, DARLENE L.
2019-103509
CBET 01-503A
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
ReplyDeleteIf I were an auditor, I would audit the Ayala Corporation because it is the Philippines' oldest and largest conglomerate with interests in retail, education, real estate, banking, telecommunications, water infrastructure, renewable energy, electronics, information technology, automotive, healthcare, and business process outsourcing. Since this corporation has a significant impact on people's daily lives, particularly in real estate and water infrastructure, it will be meaningful to audit this type of company to determine whether they are still operating effectively and competitively, or, worse, if they are involved in some corruption issues. Besides, Ayala Corporation during the current year is facing a decease in their annual net income.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Written below would be my operational audit checklist of procedures:
Planning
• Define company’s current operations and performance
• Screen defective internal strategies, management and procedures that needs improvements
• Provide synthesis on the cause-effect of internal failures the company is facing
• Formulate a realistic goal and the scope of the audit plan
• Define effective plans and procedures
• Establish alternatives
Execution
• Identify administrative support
• Collect reference documents and evidences
• Fieldwork
• Evaluate synthesis against evidences gathered
• Audit findings and recommendations
• Review results
Report
• Report audit to the administration
• Present findings with conclusion and actionable insights
Follow up
• Follow up answer, questions and reports
• Follow up audit report
References
Murdock, H. (2017). Operational Auditing: The Principles and Techniques for a Changing World. CRC Press Taylor & Francis Group. Retrieved October 16, 2021
-PALACIO, DARLENE L.
2019-103509
CBET 01-503A
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteIf I had to choose which two phases are the most significant and should never be taken for granted, I would choose the first and last phase, which is the Planning and Follow-up Phase. In my opinion, it is critical that you put in a lot of effort from the very beginning of an audit procedure to ensure that everything runs well. From staffing to setting objectives to the initial meeting with the client, everything should be organized correctly. When everything is discussed during this phase, the audit will move much more smoothly and there will be less issues.
If planning fails or the audit staff does not take it seriously, difficulties may arise during the auditing procedures. Furthermore, the Follow-up or Monitoring phase is the final step in the Operational audit, which I considered very essential because it is here where they ensure the management's action plan is being carried out. The follow-up step is frequently overlooked, despite its importance. During this phase, everything is arranged that is necessary to bring the project to a successful completion.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
The company in Philippines that I want to audit is the Alto Broadcasting System - Chronicle Broadcasting Network
or also known as the ABS - CBN Corporation. It is a Filipino media company based in Quezon City, Metro Manila, Philippines . It is the Philippines' largest entertainment and media conglomerate in terms of revenue, operating income, net income, assets, equity, market capitalization, and number of employees (Edge PSE, 2019). I chose this company because it comes to my curiousity why they have been shut down by the NTC. After all the years of providing entertainment to the people and running in the industry, they have faced the removal of license to operate not only once but twice. It became a controversial topic last year because they have been denied of fanchise renewal for an alleged violations committed by the media network against the Filipino people.
How can a Corporation who served for 68 years fail to keep their company in the industry? It will be a good experience and learning process if I had the chance to audit this media company.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
1) Analytical Review - utilized to evaluate unexpected transactions or events as a foundation or starting point for additional procedures.
3) Inquiry - inquire about the business process and how financial transactions are recorded, as well as the main controls over company transactions.
3) Observations - a type of audit approach that primarily confirms the process described by the client, either through physical confirmation or by devoting time to obtaining audit evidence in order to create their own projection, which will be compared to the client figure.
4) Inspection - for verification or vouching documents. This is one of the most important, and 60% of audit work involves the inspection of documents.
5) Recalculation - a type of audit technique that involves re-performing the client's work to see if there are any discrepancies between the audit and the client's work.
References:
https://www.arcadia.edu/university/offices-facilities/finance-administrative-services/office-internal-audit/audit-process
https://www-projectmanagement--training-net.cdn.ampproject.org/v/s/www.projectmanagement-training.
https://theaseanpost-com.cdn.ampproject.org/v/s/theaseanpost.com/article/why-did-congress-deny-abs-cbn-franchise
https://www.wikiaccounting.com/audit-procedures-meaning-example-prepare/
HANNAH SOPHIA G. MONTILLANA
(2019-105628)
AJY B. PALAMO (2019-106334) CBET-01-503A
ReplyDelete[1]
The success of each and every business in the market is also in the hands of the operational auditor because their duties and responsibilities are really critical and significant to the operation of the business. Their outstanding work ensures the effectiveness in the process being conducted by the management, therefore, operational auditors must be able to attain good qualities that will result to excellent outputs. It would be a big help for every auditors to have these set of phases as their guidelines to perform a job well done. To explain further, the five phases of operational auditing is like the key to a competent and competitive auditor, and that is how crucial and useful these five phases are. Allowing each organization to follow the said phases of operational auditing will make the path towards success to become more accessible and free from any disturbances. Furthermore, of all the phases of operational audit, these two phases is what I think are very important and should never be taken for granted, the Selection Phase and Execution Phase.
First and foremost, in selection phase, internal audit conducts a risk assessment which is very vital in continuing the process. According to Plato, the beginning is the most important part of the work which I completely agreed with. Without assessing the risk, auditors would not be able to continue the work further because they will not know what are the problem of the organization in the first place. Additionally, in this phase is where auditors create a plan out of the said assessment. A plan is the blueprint of the cycle or any processes. Without this, how will the execution of the solution become effective and organized. Meanwhile, I chose execution phase as one of the most important as well, because this is what I think are the essence of the whole process. To actually carry out the plan. Without execution, other phases would be useless, for instance, the reporting phase, there has nothing to report if there has no action done in the first place. Moreover, in this phase, auditors keep the clients informed and updated of the audit process through regular status meetings. Discussion of the audit observations, potential findings, and recommendations are also performed in this phase.
AJY B. PALAMO (2019-106334) CBET-01-503A
ReplyDelete[2]
As I scrutinize and continue to discuss the numerous and technical reasons behind the success of the businesses, I can attest to the fact that a victorious and big companies nowadays have gone through hardships and have experienced being so small once in their lifetime. Nonetheless, I still have an ample amount of curiosity to some of the said famous organization, specifically, the Jollibee Corporation. I have always been amazed by how they continue their legacy despite of the numerous competitors and despite of how long it firmly stand and still well-acknowledge in the food business industry. Because of this amusement, I would like to be part of the operational activities within the management by becoming the competent operational auditor in the future. Giving them an exceptional performance and contribute to the legacy of my childhood and my all time favorite fast food chain.
To continue the story of my desire to become the operational auditor of the Jollibee Corporation, I would like to provide an operational audit checklist of procedures to ensure that I will become an effective and efficient auditor. First, is to select and screen auditors, we all know that there are other auditors functioning in a business and I would like to personally know other people I will be working with. Then, defining my established plans and gathering documents to become my reference. After that, executing the said plans. Next is to evaluate and compile evidence or findings. And lastly, to share the conclusions and give actionable advices regarding the matter.
REFERENCES:
Grabillo, M. A. (2021). Operational Audit: What are its Phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 16, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
1. It was discussed in the past lessons what is the definition, importance, and different areas in operations audit. Also, as we all know one of the goals of an operational audit is to assess risks and maximize efficiency. The organization can determine risks and difficult spots where the organization struggles also, where the organization function more effectively by evaluating its internal procedures and regulations. An internal auditor does an audit to determine whether or not the company is running in an efficient and effective way. The audit itself is divided into different phases such as Selection, Planning, Execution, Reporting, and Follow-up phase, each of which is important in achieving the aim of providing findings and observations about the organization and making recommendations about it. As a result, there is no question that all audit phases are seen as necessary in order to generate a high-quality audit. However, as per my perspective, the two phases that are the most important among to the other phases that should not be taken for granted and those are the Planning and Execution/Fieldwork phase.
ReplyDeleteThe planning and fieldwork/execution phase will serve as the building blocks or foundation of the audit because it is where they define what type of audit should be conducted, what risks are needed to be prioritize. Also, it is where they review the past audit thus, looks on the areas that needed to be improved and makes a preliminary review of the organization’s performance. On the other hand, in the execution/fieldwork phase is the lengthiest phase in the part of conducting an audit but one of the most important part of an audit because it is where they gather information about the organization also, obtain understanding of the organization’s strength and weaknesses. In addition, the fieldwork phase plays a vital part in conducting an audit because it is where they review whether the created audit plan / program is effectively designed in order to achieve the organizations’ goal and whether it is likely to be achieved.
2. If given the chance, I would like to audit the SM Corporation because ever since I was a kid, I admire how big SM Corporation is. Also, I’ve always asked myself how SM achieves that kind of success because as we all know, there is an SM Mall most of the cities in metro manila even in Visayas and Mindanao. After searching a quite some time, I happened to click on their Charter of Internal Audit and noticed and in amazement because it was very detailed and you can see that they are practicing independence which is one of the most important in auditing.
ReplyDelete3. Moreover, in order to ensure that the conducted audit is effective as an operational auditor you must provide a checklist of procedures in order to determine the effectiveness of such audit. Hence, an operational audit is risk-based and also future-oriented I will base my checklist on the 4 stages of Deming Cycle wherein it consists of Plan, Do, Study/Check, and Act. Just like in planning phase the first step is to assess the problems/risk that needs actions and recommendation. Once the problem/risk is known the auditors should start to execute and start testing solution it is like the fieldwork phase in auditing. After such testing of the solution by now you should keep track of what happened and try to illustrate it in a chart or other ways to show what happened and since testing is done and sufficient solutions are made, information’s and result are gathered the auditors can formulate a soundful decision of what is the most effective and efficient way to mitigate those risks/problems. Lastly, you need to act as an auditor since you’ve already made a soundful decision and determine what is the best way to mitigate those risk/problems you need to Adapt, Adopt, and Abandon. In other words, you need to make changes and modify the process of the functions of the organization and consider expanding the system and approach of the different departments of the organization.
References:
Eby, K. (2017, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
Mark Grabillo. 2021. OPERATIONAL AUDIT: WHAT ARE ITS PHASES. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
PwC. (2017, May). Understanding a financial statement audit.
https://www.pwc.com/im/en/services/Assurance/pwc-understanding-financial-statement-audit.pdf
RETONE, RENCE LOUIESE E.
(2019-105248)
CBET-01-503A
(1/2)
ReplyDeleteAn operational audit examines the processes, systems, and procedures of an organization (QVALON, 2021). It involves an in-depth dive into the documents and transactions, analyzing the strengths and possible opportunities, managing weaknesses, and mitigating threats. All of these activities are for the attainment of the goal in mind of enhancing the company's operations. And to perform the audit process the right way, it must follow the phases accordingly – Selection, Planning, Execution, Reporting, and Follow-up. By doing so, it will ensure better results as it will function as smoothly as possible.
All the phases of operational auditing are equally essential and beneficial. Activities performed in every phase contributes to the result, little by little, step by step, completing the audit process. Although each phase is highlighted with the same significance, I’d say the Planning and Execution phase is leading by point one percent compared to the others. The Planning phase is the start of the audit process, the stage that would act as a guide as to the manner of accomplishment of tasks. It is when goals and objectives are sorted out. Relevant data are gathered and analyzed to organize and address selected areas. It also includes the coordination of line responsibilities with the staff and settlement of the time frame of the audit process. Planning should never be overlooked; may it be in auditing a company or in life in general. I am the type of person who can’t execute properly without making a plan, especially when working with a handful of deadlines. It helps me organize my time and prevent being overwhelmed with the long list of things to accomplish. After that is the Execution phase, the stage to oversee the actual operations of the company. It is the enactment of plans and examining the effectiveness of policies, interviewing employees, and connecting information gathered. This phase is critical in forming reliable findings and suggestions that will be reflected in the reporting phase. All in all, these are the reasons why I think the Planning and Execution phase are leading just a little bit to the other phases in terms of significance.
Shayne Danielle G. Samson 2019-102562
CBET-01-502A
(2/2)
ReplyDeleteApplication of the concept of operational auditing is another step to take to understand the process more. And for that, I’d like to choose Human Nature to audit if I’d be given a chance. Just recently, a controversial short film entitled “Save Ralph” was released. It’s all about Ralph, a rabbit for testing products as part of the experimental and development stage. Its purpose is to raise awareness that “No animal should suffer and die in the name of beauty.” Because of that, I got curious about cruelty-free companies here in the Philippines. I discovered that in 2016, Human Nature was the first Asian beauty brand to receive the Sustainability Pioneer Award from Ecovia Intelligence, a global consulting institution for the natural and organic beauty industry. Alongside that, they are also employing residents from Gawad Kalinga to help eradicate poverty. It would be nice to understand their process and learn from their passion and achievements.
The creation of an operational audit checklist of procedures will ensure that the audit process for Human Nature is effective. The goal is to find evidence that the process is meeting its own requirements (Stojanovic, n.d.). The checklist would include the following:
(1) attainment of the goals and objectives;
(2) quality performance of management and employees;
(3) continuous compliance of laws and regulations and sustainable business practices;
(4) status of management of corrective actions for risks and threats;
(5) changes that could affect the operations;
(6) level of profitability; and
(7) suggestions in areas for further improvement.
References:
Human Nature. (n.d.). Human Nature - Our Story. English. Retrieved October 17, 2021, from https://humanheartnature.com/buy/organicsoptionph/our-story
QVALON. (2021, July 15). Operational Audit Overview: ️ Definition, Process, and Purposes | QVALON. Qvalon.com. https://qvalon.com/blog/operational-audit-overview-definition-process-and-purposes/
Stojanovic, S. (n.d.). ISO 9001 Audit Checklist: What it is, how it’s used and why. Advisera.com. Retrieved October 17, 2021, from https://advisera.com/9001academy/knowledgebase/iso-9001-audit-checklist/
The Humane Society of United States. (2021, April 6). Save Ralph - A short film with Taika Waititi. YouTube. https://www.youtube.com/watch?v=G393z8s8nFY
Shayne Danielle G. Samson 2019-102562
CBET-01-502A
Operational audit is the type of audit service that the review is mainly focused on the key processes, procedures, system, as well as internal control which the main objective is to improve productivity, as well as efficiency and effectiveness of the operation (Sinra (N.D.)). And one of the things to have an efficient and effective operation is following phases that can lead to sucess but what are the two phases that can help the sucess of an operation? If i would have a chance to pick the company i will audit whose company will i pick? What procedures should i make to be effective?
ReplyDeleteI think the most important phases are planning and fieldwork because planning helps us decide clearly and concretely what we need to do to affect the business that we wanted. It helps us make sure that we all understand our goal and what we need to do to reach it, by involving everyone in the planning process makes the plan better because the people know it helped in the process. Fieldwork because this phase includes assessing the adequacy of internal controls and compliance, testing of transactions, records, resources, and performing other procedures necessary to accomplish the objectives of the audit. It is important to take action the plan to know if what you plan is effective and can resolve the problem.
The company I would like to audit is the San Miguel corporation because from what I’ve heard being an employee there even the lowest ones were all taking care of. They value their employees and because of that, their employees are loyal to that company. The corporation also gave many benefits to its people. So I think the both of us (me as an individual and the corporation) will be benefited. And of my chosen company I will follow the twelve procedures: (1) Select and screen auditors, (2) Define audit plans and scope, (3) Pull together reference documents, (4) Identify administrative support, (5) Research operational procedures, (6) Collect statistical evidence, (7) Audit evidence from all sources, (8) Evaluate evidence, (9) Compile audit findings, (10) Share audit conclusions, (11) Give actionable advice, and (12) Follow up with questions and concerns (gocardless.com).
In conclusion, procedures are important in every work, because it helps every people to know the things before they do it and will give them the idea on how and when should they do.
Resources:
Kate Eby (September 19, 2017), (last modified on July 19, 2021) Operational Audits
101: Processes, examples, and checklists.
https://www.smartsheet.com/operational-audit-process
The University of Texas at Austin: Audit Process https://audit.utexas.edu/audit-process
N.A (N.D): What is an operational Audit
https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Sinra (N.D.): Operational audit: Definition, Types, Processes, Example, and Reporting https://www.wikiaccounting.com/operational-audit/
----Marinel S. Nudo (2019-106335)
This comment has been removed by the author.
ReplyDeleteTwo Phases That I Think are Very Important and Should Never Be Taken for Granted (1/2)
ReplyDeleteEach audit phases have its own function. According to the University of Oregon (n.d.), operational audit has five phases, these are: selection, planning, fieldwork, reporting, and follow up. The five phases of Operational Audit are important, but if I were to choose two very important phases that should never be taken for granted, these are planning and conducting fieldwork.
According to Wiki accounting (n.d.), to ensure that the financial statements provided by the firm do not include any major misstatements there must be a quality audit. As a result, the audit planning process is of utmost importance in this regard, as it assists auditors in formulating and presenting a realistic strategy that will enable them to meet the essential objectives on time. It is highly beneficial for the procedure to be carried out and completed as smoothly as possible. In planning, auditor can strategize first to come up with ways in mitigating risk. Audit planning enables auditors and clients to work together in a more concise way, resulting in better outcomes in a shorter period. As a result, this process must be given the attention to proceed the audit process smoothly as possible. On the other hand, conducting fieldwork is important as planning. This the phase where the execution of plans happens. University of Oregon (n.d.), Auditors carry out the steps identified in the planning process during the fieldwork phase. These steps include examining transactions, papers, and records with the goal of ensuring that the controls implemented by university administration are in effect, adequate, being followed, and working efficiently. After the fieldwork is completed, an exit meeting will be held to review the audit findings and identify any necessary corrective action plans. If these two phases are executed perfectly, other phases success will follow and providing a high-quality audit is guarantee.
Company in the Philippines I Would Like to Audit
The 15B pocketed public fund allegation in the Philippine Health Insurance Corp. (PhilHealth) shocked the Philippines in September 2021. This is the reason why I chose Philippine Health Insurance Corp. (PhilHealth) as the company in the Philippines that I would like to audit. According to Finance Secretary Carlos Dominguez III (2021), “PhilHealth has a real serious problem with their system”. Honestly, this issue saddens me. I feel like I need to do something. When I visit their website, their objective captures my attention because it is the opposite of what they are doing right now. Delayed pay to health workers, underpayment of health workers, delayed benefits of Filipino citizens, and failing to address Covid19 properly. To provide comprehensive health care services to all Filipinos through a socialized health insurance program, this objective is far from what they have been doing recently. I would like to audit PhilHealth to help fix what is wrong with their system because many lives depend on this company.
(1/2)
Oclarit, Sophia Shield G. - 2019-105246
Operational Audit Checklist of Procedures to Ensure That Audit Is Effective (2/2)
ReplyDeleteSince PhilHealth has a real serious problem with their system, I would like my operational audit checklist of procedures to be a precise and explicit as possible. Karpa (2021), suggest a checklist to assist in the selection of the most qualified audit criteria. I choose to include plan, do, check, and act. To aid in my planning, I will first select competent audit staff members. After choosing who will be in my team, defining audit plans and procedures will be the next target that will serve as a guide all throughout audit. After formulating the audit plan and procedures, it is now the time to move to the next in the checklist which is Do. Gathering reference documents and collecting information are the focus of these criteria. Since PhilHealth is accused of a 15B corruption issue, it is crucial to find evidence to use in the next checklist. After finding evidence and reference next on the checklist is Check. In checking it is the time now to evaluate if the findings from audit is free from influence. Most especially, huge amount of public funds is in the line. After confirming that the findings are free of any interference from within or outside the company it is the time now to Act. Communicating the findings and follow-Up to answer questions and concerns about audit findings will be the last part of my checklist. This checklist of procedures will ensure that the audit is effective.
References:
Office of Internal Audit. Audit Process. (n.d.). Audit Process. University of Oregon. Accessed October 16, 2021 https://internalaudit.uoregon.edu/report/audit-process
Why audit planning is so importance? Wikiaccounting. (2021, July 24). Accessed October 17, 2021 https://www.wikiaccounting.com/importance-audit-planning/
Manuel, P. (2021, September 8). DOF chief: PhilHealth has 'serious systemic problem,' digitalization to address issues. CNN. Accessed October 17, 2021 https://www.cnnphilippines.com/news/2021/9/8/Dominguez-PhilHealth-digitization.html
Belgica, J. (2021, September 5). What's wrong with Philhealth and what right can we all do? The Manila Times. Accessed October 17, 2021 https://www.manilatimes.net/2021/09/05/opinion/columns/whats-wrong-with-philhealth-and-what-right-can-we-all-do/1813550
Eby, K. (2021). Operational audits 101: Processes, examples, and checklists. Smartsheet. Accessed October 17, 2021 https://www.smartsheet.com/operational-audit-process
(2/2)
Oclarit, Sophia Shield G. - 2019-105246
In Operational Auditing, there are four phases which are planning phase, the fieldwork phase, reporting phase, and the feedback phase. In my perspective, of all these phases, the planning and fieldwork phase are essential. The planning phase is the beginning of auditing a firm. In this stage, ideas are created to discuss its objectives and gather information to plan for the subsequent processes. For me, it is a structure of every success in the company. Without planning, the firm will not determine its goals. Auditors will not have a guide in executing their job correctly.
ReplyDeleteAnother one is the Fieldwork Phase. In the Fieldwork Phase, auditors test whether the controls identified are operating effectively or not. According to The University of Texas at Austin, the evaluation phase of the audit is referred to as fieldwork. This phase includes assessing the adequacy of internal controls and compliance, testing transactions, records, and resources, and performing other procedures necessary to accomplish the audit objectives. (The University of Texas at Austin, n.d.). In this phase, the auditor concludes from the findings he has gathered to prepare a final draft of the audit report. It is essential to find areas that need to be improved. Throughout the audit process, the clients are informed through meetings. The auditors discuss information, potential issues and proposed recommendations to their clients.
If I were to choose a company in the Philippines to audit, that would be the BDO Unibank. BDO is a full-service universal bank in the Philippines. It provides a complete array of industry-leading products and services, including Lending (corporate and consumer), Deposit-taking, Foreign Exchange, Brokering, Trust and Investments, Credit Cards, Retail Cash Cards, Corporate Cash Management, and Remittances in the Philippines. Through its local subsidiaries, the bank offers Investment Banking, Private Banking, Leasing and Finance, Rural Banking, Life Insurance, Insurance Brokerage, and Online and Non-Online Brokerage services. (BDO, n.d.). I chose BDO Unibank to prove how trustworthy the bank is. I also want to know if there are anomalies involved in the bank since they are one of the most trusted banks in the Philippines. I want to verify if they abide by the laws and regulations and examine every document proving their credibility. Furthermore, I want to know how effective and efficient BDO Unibank’s operations and processes are. I want to look at their internal control and how they operate daily towards achieving their goals.
Operational Audit Checklist of Procedures:
Plan:
Select Competent Auditors
Screen Auditees
Define Audit Plans and Procedures
Define Purpose and Scope
Do:
Reference Documents
Identify Administrative and Infrastructure support
Collect Information
Audit:
Audit Evidence
Check:
Evaluate Against Criteria
Audit Findings
Review Findings
Act:
Present Report with conclusions and Actionable Information
Follow-up to answer questions and concerns
Follow-up Audit
(Eby, 2019)
References
BDO. (n.d.). Corporate Profile. https://www.bdo.com.ph/mobile/about-bdo
Eby, K. (2019, September 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
The University of Texas at Austin. (n.d.). Audit Process. https://audit.utexas.edu/audit-process
Madera, Dianne M.
2019-102064
CBET 01-503A
This comment has been removed by the author.
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteWorking Together for the Best Result, you can expect to be involved or kept informed in every stage of the audit process. The process works best when we both have a solid and constructive working relationship based on clear and ongoing communications. We will help to ensure that there are no surprises during the audit and will result in a better finished product. While each audit is different, the life cycle of most engagements will normally go through the following broad phases.
Planning and Risk Assessment, the annual audit plan is based a university wide assessment of auditable areas and business risk. Included in the analysis are various risk factors such as financial, compliance, operational, reputational, health and safety, and protection of organizational value. Input from a variety of sources is obtained and incorporated into the overall development of the plan. This annual audit plan is reviewed and approved by the Audit Committee of the Board of Trustees.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
The aim of an operational audit is ultimately to optimize efficiency. By auditing the business's internal policies and procedures, the company can identify trouble spots and operate more effectively. The outcomes gleaned from the audit are most useful to the management team, who can take these recommendations on board to streamline future processes. Here are three of the primary outcomes of a successful operational audit.
The company in the Philippines that I would like to audit is Ayala Corporation because I'm curious how they achieved that kind of accomplishment. Ayala Corporation (Spanish: Corporación Ayala, formerly Ayala y CompañÃa) is the publicly listed holding company for the diversified interests of the Ayala Group. Founded in the Philippines by Domingo Róxas and Antonio de Ayala during the Spanish colonial rule, it is the country's oldest and largest conglomerate. The company has a portfolio of diverse business interests, including investments in retail, education, real estate, banking, telecommunications, water infrastructure, renewable energy, electronics, information technology, automotive, healthcare, and management and business process outsourcing. As of November 2015, it is the country's largest corporation in terms of assets ($48.7B). I want to know how they achieved that assets.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
The operational audit checklist that I found in internet to ensure audit effectiveness of my chosen company to audit, it includes: select and screen auditors, define audit plans and scope, pull together reference documents, identify administrative support, research operational procedures, collect statistical evidence, audit evidence from all sources, evaluate evidence, compile audit findings, share audit conclusions, give actionable advice, follow up with questions and concerns.
References:
https://internalaudit.ku.edu/project-process
https://en.m.wikipedia.org/wiki/Ayala_Corporation
https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
-ASPILLAGA, HERMANA D.
(CBET-01-501A)
(1/2)
ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
Again Auditing process has five phases consists of selection, planning, execution, reporting, and follow-up phases. And auditing process was defined as “A series of steps, taken to analyze particular business operations. The end product is a final report detailing aptitude against set standards.” (Courtnell, 2020). It means that all phases are important and should never be taken for granted. Because when we say “process” it is a continuous action to achieve the result that the organization wanted. If there is one action or phase that will be disregarded, then the result of work done will slightly or far different from the desired goal of the organization. To discuss why these phases are all important and should be conducted properly, Selection and Planning phase as the first two phases, the independence and objectivity will be established through appointing the audit staff members and doing risk-assessment as well as acquiring the relevant information of the business. While the Execution and Reporting phase will give an assurance on the perspective of both the audit team and clients. That the independence and objectivity were really established during the process through communication. Then Follow-up phases will determine if the actions taken on the preceding phases are effective and whether the deadlines were met. All these phases should not be taken for granted because one of these can cause conflict between the trust of the clients or management to the results of work done conducted by the auditors.
(2/2)
ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
2GO Group Incorporated is one of the largest integrated transportation and logistics provider in the Philippines. They are the company that I would like to audit because they faced an accounting scandal during the year 2017 against the local unit of accounting firm KPMG, R.G Manabat & Company. Actually, I don’t have that much knowledge about this accounting scandal that they faced before. But it seems like 2GO Group Incorporated having issues with regards to their financial statements every time the company is changing their management’s officers. That is why it will be an achievement also to the auditors who will conduct an audit of this company if they will give a continuously good audit report in accordance with the accounting standards and SEC’s policies. The job of the operational auditors is also to help the company or their clients to produce well-prepared financial statements and good results from the audit reports. This kind of company that always faced a discrepancy will really test the skills and expertise of every auditor with their profession. Also, it will be an opportunity for the new auditors to create a good reputation and increase their value in the service industry.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
To ensure that the audit is effective in the company of 2GO Group Incorporated here is the provided operational audit checklist of procedures for better flow based on the audit phases:
1. Select and screen auditors
2. Define audit plans and scope
3. Pull together reference documents
4. Identify administrative support
5. Research operational procedures
6. Collect statistical evidence
7. Audit evidence from all sources
8. Evaluate evidence
9. Compile audit findings
10. Share audit conclusions
11. Give actionable advice
12. Follow up with questions and concerns
References:
Courtnell, J. (2020, February 20). Audit Process: 5 Expert Steps for You to Get Your Audit Right | Process Street | Checklist, Workflow and SOP Software. Process Street. https://www.process.st/audit-process/
What Is an Operational Audit? (n.d.). GoCardless. Retrieved October 17, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Tomacruz, S. (2017, July 13). Doubts hound KPMG following 2GO accounting scandal. Rappler. https://www.rappler.com/business/kpmg-2go-accounting-scandal
NERI, LONEIL BERT L.
(2019-105281)
CBET-01-502A
GESTA, CHARLOTTE G. (2019-100594)
ReplyDelete1/2
1. Auditing phases are important to achieve the objective of operational auditing – improve the organization's performance. There are four phases in auditing: the planning phase, the fieldwork phase, the reporting phase, and the follow-up phase. All of these phases are imperative for completing the audit and however planning phase and the fieldwork phase are the phases that should never be taken for granted.
Auditing begins with the planning phase that serves as the foundation of the whole auditing process. If an engineer needs a blueprint to construct a building, an auditor needs an audit plan to conduct auditing. The planning phase includes scoping, budgeting, defining the population of interest, how testing will be performed, and announcing the audit (Murdock, 2017). Benjamin Franklin quoted "Failing to plan, is planning to fail" because without a clear and defined plan, the auditing process would be chaotic and disorganized. Also, poor planning results in inefficient auditing practices and a longer time frame. This phase should not be taken for granted because through planning, you know where are you heading to, you know what are the steps you should take, and you create a ladder to reach your objective in the organization – to improve their operations and provide reasonable assurances that would help them achieve their goals and objectives.
Next to the planning phase is the fieldwork phase. This phase is when most of the testing is performed, and it includes interviewing, documenting, applying testing methodologies, managing fieldwork, and providing status updates (Murdock, 2017). This phase is where the auditor starts to find and examine relevant and factual evidence about the entity. It is where the examination and careful evaluation of the organization’s operations happens. An auditor should take this phase seriously because the fieldwork phase serves as the body of the auditing process. This is where judgments, opinions, and reasonable assurances that are communicated to the management are derived from.
To conclude, all phases of auditing are necessary to complete the whole auditing process. However, the planning phase and the fieldwork phase are the phases that should never be taken for granted because these phases build the foundation of the whole auditing process.
ReplyDelete2/2
2. There are lots of companies operating in the Philippines. But, if I will choose a company in our country to audit, it will be San Miguel Corporation. San Miguel Corporation (SMC) is one of the Philippines’ largest and most diversified conglomerates. It has a portfolio of companies that is interwoven into the economic fabric of the Philippines, benefiting from, as well as contributing to the development and economic progress of the nation. San Miguel Corporation has always been committed to its mission, vision, values, social responsibilities, and other business endeavors. They have their Charter of Internal Auditing that assists the company in accomplishing its goals and objectives.
With their success, it interests me to know their policies, systems, and procedures that help the company on achieving its goals and objectives. I want to work in a company that serves the best interest of its customers, stakeholders, and the whole nation. I want to contribute to the success of a corporation that has done a lot for the country’s economy. Furthermore, I believe that working in this corporation is a stepping stone for me, and it will open doors of opportunities to help me improve my skills and to grow in this profession.
3. An operational audit checklist would guide me throughout the auditing process and ensure that I can audit my chosen company effectively and efficiently. These checks are of paramount importance because through this, I can track my progress. The checklist that I made is outlined in the Accountant Go Cardless article. The first thing in my checklist is selecting and screening auditors to create an auditing team. It is important that the auditors that I will be working with share the same objectives as mine and has the same amount of enthusiasm, excellence, integrity, and objectivity in exercising this profession. Next, I will define audit plans and scope and pull together reference documents relevant to the auditing process. Then, I will identify administrative support and research operational procedures that will help carry out the whole auditing process. Subsequently, I will start collecting statistical and audit evidence that will be evaluated and assessed. The results and findings from the evaluations will be compiled and communicated to the management. Finally, the last two steps on my checklist are providing recommendations and having follow-ups with questions and concerns.
References:
Accountants Go Cardless. (n.d.). What is an Operational Audit? https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World (1st ed.). Taylor and Francis Group, LCC.
San Miguel Corporation. (2021). Our Company. https://www.sanmiguel.com.ph/page/our-company
Will, Kellar. (2020, July 1). "If You Fail to Plan, You Are Planning to Fail". Human Investing. https://www.humaninvesting.com/450-journal/if-you-fail-to-plan-you-are-planning-to-fail
GESTA, CHARLOTTE G. (2019-100594)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteAn operational audit is a review of how a company does business with the goal of identifying ways to improve efficiency and effectiveness. This sort of audit differs significantly from a traditional audit, which examines the adequacy of controls and assesses the financial statements' fairness of presentation. There are various auditing phases such as planning, risk assessment, audit strategy and plan, gathering evidence, and finalization. However, I think two of the most important phase are the risk assessment and gathering evidence.
Risk assessment is the process of identifying and assessing risks identified to an organization's objectives in order to ascertain how such risks will be addressed. In this process, internal auditing identifies the impact of the risk to the organization. After that, they evaluate on how to reduce the risk to be in a manageable level.
While in gathering evidence, it is mixture of techniques: visual observation, examination of records and employee interviews. Visual observation is the most basic way in data gathering, just looking around would make you understand more the flow of the organization. Some of the powerful pieces in audit are uncontrolled documents, product outside normal flow, measuring instruments, housekeeping and organization, product identification, improvised fixes and repairs, and informal record keeping. On the other hand, since records are artifacts, they show us what happened in the past. It is a credible record that shows us that something happens during that time. We know that record is a must in every transaction and what happens in the organization. And here are some characteristics that help the record become more credible. It must be completely filled out, have dates, show the participants, show the actual results and have subsequent actions. And in employee interview, it should have a structure. Unlike a normal conversation, which might cover a wide range of topics, an interview has a definite goal. Your goal is to record accurate information about the audited procedure. In cases where there are requirements for records, a statement alone would not suffice.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I would audit one company, it would be SM Prime Holdings, since we all know it is a very big company that has vast range of products and services that they offer. I want to know how they made their company unrivaled in business and I also want to observe their growth.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Operational checklist i s a structured project assessment tool that outlines the pre-startup processes and specifications that will bring a project to a state of readiness to commence or restart. And here’s the checklist for better flow. First one we should define audit plans and its scope so we will know how to properly do it, and then pull together the reference documents so we will have background on past events. After that, Audit evidence from all sources will come next, and then we should evaluate it. Next one is compiling the findings and share our audit conclusion. And the last one is for us to give actionable advice and ask them for follow up question and concern.
References:
Risk Assessment Process - Internal Auditing - Western Illinois University. (n.d.). Western Illinois University. Retrieved October 16, 2021, from http://www.wiu.edu/internal_auditing/value_added_audit_services/risk.php#:%7E:text=During%20the%20risk%20assessment%20process,risk%20is%20at%20manageable%20levels.
-Rochelle Anne V. Amarga (2019-106144)
(1/2)
ReplyDeleteOperational Auditing is focused on efficient and effective usage of organization's resources through following phases such as planning, fieldwork, reporting, and follow-up which are dynamically associated with each other (Murdock, 2017). Thus, it is crucial to jump phases as it results to failed implementation and management. But to name two phases that I considered to be most significant among all other, that is planning and fieldwork.
"Failing to plan is planning to fail", hence, scoping, budgeting, defining the population of interest, how testing
will be performed, and announcing the audit should never be skipped. According to Murdock (2017), "Planning is an essential initial step that puts the organization on the right footing of success. Without clearly defined, communicated, and understood objectives, all involved are likely to drift during the course of the review by asking for irrelevant documentation, interviewing people unnecessarily, examining transactions, and analyzing process characteristics that are alien to the priorities embraced by the sponsors of the engagement". Along this phase, broad over-all viewpoint and examination of previous audit report will be done which initially gives the auditor a glimpse of competence and inadequateness of the company that later be resolved.
In addition, fieldwork phase adds value to the organization's growth as it includes testing, interviewing, documenting, applying methodologies, managing fieldwork, and providing status updates. A company whose top management relies chiefly on reports prepared by field (line) personnel commonly are in doubt on the documents' accuracy and reliability as it limits financial and statistical analysis (Miller, 1957). Throughout the fieldwork phase, auditors opt to collect evidences to evaluate during review and it includes: (1) testimony of individual states about his or her own personal knowledge about specific information, (2) observations on security, flow of customers, machinery, and other details on the process itself, (3) document inspection particularly invoices, reports, policy statements,and other procedural documents; etc. Its particular objective is to support their audit and persuade others that conditions are satisfactory or not.
- Bataller, Erica Ann R. (2019-103327)
(2/2)
ReplyDeleteLiving in an era of evolving technology, internet connection were later become an essential necessity of every household. The covid-19 pandemic opens great opportunities for the companies in line with technology as classes, meetings, and ceremonies were held virtually. But even its absence, technology will later dominate our lives and everything will be controllable within our palms. But with the recent Ookla report (2021), the Philippines ranked 65th spot (up from 84th) out of 180 countries in fixed broadband, and 77th spot (up from 80th) out of 137 countries in mobile. Many Filipinos were experiencing poor connection with high cost compared with other southeast asia neighbors particularly thailand who ranked 37 out of 211 countries on the world's cheapest internet subscription, whereas Philippines ranked 119th with $53.71 cost per package and $0.75 per mb (Atlas & Boots, 2021). According to Converge ICT Solutions Inc. report, its growth and profitability are continously accelerating in FY2020 with 71% YoY revenue growth, 76% YoY EBITDA growth and EBITDA margins expanding from 51.0% in FY2019 to 52.5% in FY2020. By this I want to audit this particular company with an audit checklist and procedure of:
1. Planning phase
Background and Geological Study of different cities and provinces in the Philippines
Pinpoint necessary actions needed to be taken
Choosing of right personnel with the strong background on technology and cabling
Risk assessment on areas that brownouts are likely to occur
2. Fieldwork phase
Observing the status of signals in rural and urban areas
Testing the machineries and signal tower performance
Providing status update on those who upgrade and downgrade their subscriptions and assessing its reasons
3. Reporting phase
Meeting to board of directors and/or managers
Stakeholders’ meeting
4. Follow-up
Review of adjustments such as customers satisfactory
Assessing the growth of profit and expansion of outside investments
References:
Atlas & Boots. (2021). CHEAPEST INTERNET IN THE WORLD: 2021 COUNTRY RANKING. Retrieved from https://www.atlasandboots.com/remote-work/countries-with-the-cheapest-internet-world/
Converge ICT Solutions Inc. (2021). Converge Reports Record Result For 4Q2020, Doubling Its Residential Subscriber Base To More Than One Million Resulting In 71% Y.O.Y Revenue Growth (FY2020, Y.O.Y), And Increased Profitability With Php8.2bn Ebitda (52.5% Ebitda Margin) And Php3.4bn Net Income (21.6% Net Income Margin). Retrieved from https://corporate.convergeict.com/news/converge-reports-record-result-for-4q2020-doubling-its-residential-subscriber-base-to-more-than-one-million-resulting-in-71-y-o-y-revenue-growth-fy2020-y-o-y-and-increased-profitability-with-p/
Department of Information and Communications Technology. (2021). PH Internet speed rankings continue to climb upward in May 2021. Retrieved from https://dict.gov.ph/ph-internet-speed-rankings-continue-to-climb-upward-in-may-2021/
Miller, R.W. (1957). Operations Auditing, A Study of the Newest Phase of Internal Auditing [Master’s Thesis, The University of Richmond]. http://scholarship.richmond.edu/masters-theses
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
- Bataller, Erica Ann R. (2019-103327)
ReplyDeleteHALINA,DANICA c.
CBET-01-503A
1. An operational audit process is a set of procedures used by an auditor to assess a company's or organization's operational activities. Because each department plays a role in the entire operational process and is interrelated, it typically does not focus on a single department or project. Operational Audit provides the benefit to seek the from and to properly ensure that all data being report are all accurate and properly checked.
Based on what I have learned, the two most important phases of operational audit for me would probably be plan and execution. Proper planning is the best foundation we can give in everything that we do, without proper planning and consideration in every aspect of a company and a situation result in failure to recognize the important factor. The second important phase is execution. The execution would be a bit more challenging than the other phrases “Great companies and successful individuals execute better than their competition.” (pagnatokarp.com) This basically means execution is important because it is where you will test the waters and see if the strategies of your company are effective.
2. The company that I wish to work with would probably be KPMG. I can tell that it is a good company to invest my time and effort. Since it mainly focuses on auditing services. Its main objectives are to provide a learning culture and leadership which I think would be beneficial for me. Entering this company would be a great opportunity for me in which I can contribute my skills. Speaking of skills, I think some of the skill that I possess is very well suited to be in this company.
3. According to Eby (2017) here are some of the operational audit checklists. To begin with, establishing objectives should be based on the aims and priorities of management. Consider the features of products, initiatives, and procedures, as well as any adjustments. Consider management system requirements, contractual and legal obligations, as well as other considerations. Next, Establishing the Audit Program, Determine the audit program manager's tasks and his or her expertise. Set procedures and identify resources after determining the extent and potential dangers. In addition to, Implementing the Audit Program, Define the objectives, scope, and criteria, as well as the audit team members and the audit team leader's responsibilities. Manage the outcome as well as the records. Monitoring the Audit Program: Assess compliance with the program, timetable, and objectives, and then evaluate the audit team members' performance and the audit teams' capacity to carry out the plan. Examine all stakeholder feedback. Audit results demonstrated management system effectiveness, and changes to the auditee's management system, standards, and other requirements are all variables that can lead to the need to amend the program.
REFERENCES:
What is an operational audit? Retrieved from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
KPMG EMPLOYEE REVIEWS retrieved from https://in.indeed.com/cmp/Kpmg/reviews?start=340
Eby K. (2017) Operational Audits 101: Processes, Examples, and Checklists retrieved from https://www.smartsheet.com/operational-audit-process
The importance of execution retrieved from https://www.pagnatokarp.com/the-importance-of-execution/
- Halina, Danica C. (2019-103671)
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteThe two phases that I think important in the phases of Operational Audit is the second phase which is planning and the last phase which is the follow-up on corrective action plans. Planning is the most essential phase of operational auditing because planning is everything, for the company have its direction. The value of audit planning is not derived solely from the resulting audit plan. Often overlooked, the real benefit of audit planning is gained from the process itself. In painstakingly documenting endless client details, auditors achieve more than just compliance with professional standards—they also develop more efficient engagements and help reduce professional liability risk. Also in this phase, audit objectives are defined and audit methodology is determined through the creation of an audit program, which is the blueprint for conducting the audit and accomplishing the audit objectives. Then, the follow-up phase is also important because there will be occasions when corrective actions to resolve an audit issue will not be accomplished until after the audit report has been finalized. In these cases, follow-up will be performed on the previously reported recommendations to determine whether corrective action plans have been effectively implemented and that expected results are being achieved. Depending on the severity of the audit issue, follow-up activities could include interviewing staff, reviewing updated procedures or documentation, or re-auditing the processes that originally led to the audit issue.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
One of the companies in the Philippines that I would like to audit is San Miguel Corporation because I want to be part of the continuous success of San Miguel Corporation and I also like their work environment, the perks and benefits of employee of San Miguel Corporation because according to my relatives who is working under San Miguel Corporation the salary and benefit there is good. And also, I want to know the reason behind their success from year 1890 which the date it is establish until today, I want to know the flow of their operation internally and externally.
CORTEZANO, ELEONORA LAURA A.
2019-103875
CBET-01-502A
PART 2
ReplyDelete3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Operational Audit Checklist of Procedures of San Miguel Corporation to ensure that audit is effective.
1.) Establishing Objectives: Base objectives on management goals and priorities. Consider the characteristics of products, projects, processes, and any changes to them. Take into account management system requirements, contractual and legal requirements, and other requirements. Evaluate suppliers and the needs and expectations of interested parties, including customers. Take into account the auditee’s level of performance, risks, previous audit results, and the maturity of the management system being audited.
2.) Establishing the Audit Program: Identify the responsibilities of the audit program manager and establish his or her competence of the person. Determine the scope and potential risks, then set procedures and identify resources.
3.) Implementing the Audit Program: Define the objectives, scope, and criteria, and select the audit team members and assign responsibility to the audit team leader. Manage the outcome and records.
4.) Monitoring the Audit Program: Assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team members and the ability of the audit teams to implement the plan. Evaluate feedback of all stakeholders. Some factors can determine the need to modify the program, including audit findings, the demonstrated level of management system effectiveness, and changes to the auditee’s management system, standards, and other requirements.
5.) Reviewing and Improving the Audit Program: Evaluate if objectives have been achieved. Use lessons learned as inputs for continual improvement. The review should consider results and trends, conformity with procedures, the evolving needs and expectations of interested parties, records, alternative or new auditing methods, the effectiveness of the measures to address associated risks, and confidentiality and information security issues relating to the audit program.
References:
Gartland, D. (2017, September 1). The importance of audit planning. Journal of Accountancy. https://www.journalofaccountancy.com/issues/2017/sep/importance-of-audit-planning.html
Eby, K. (2021, July 19). Operational Audits 101: Processes, Examples, and Checklists. Smartsheet. https://www.smartsheet.com/operational-audit-process
San Miguel Corporation. (n.d.) Our History. https://www.sanmiguel.com.ph/page/our-history
The University of Texas at Austin Office of Internal Audits. (n.d.). Audit Process. https://audit.utexas.edu/audit-process
CORTEZANO,ELEONORA LAURA A.
2019-103875
CBET-01-502A
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeletePhases of operational auditing examines the system of an organization. These phases of operational audit helps to investigate and develops the management practices to find all the loopholes to the current system and giving management an outline of the issues in play. Operational Auditing phases centered its focus on generating possible improvements for a business or organization operation that isn't just concerned with the mistakes and achievements.
Of all the phases of operational audit for me the most significant and has an important role that should never be taken for granted is the phase of planning and execution According to Dwight D. Eisenhower's "Plans are worthless, but planning is everything," the value of audit planning is not derived solely from the resulting audit plan. But more specifically overlooked, the real benefit of audit planning is gained from the process itself. In painstakingly documenting endless client details, auditors achieve more than just compliance with professional standards—they also develop more efficient engagements and help reduce professional liability risk that helps to provide a more concrete strategy. Planning is the foundation of all phases. Therefore, the phase audit planning tends to hold an importance owing to the fact that it helps auditors prepare and provide an effective and efficient strategy that can help them to achieve the required objectives, in due time. In line with this it should never be taken for granted to for audit phases to maximized productivity and resources are not wasted on projects with little chance of success. And second is execution. The execution phase of an audit engagement is an intense period of activity. Managing teams, analyzing
information, executing testing, making judgements, documenting work, and interacting with clients. In line with this Execution plays a vital role to apply the plans made from the previous phase, if execution failed to do as expected the planning would become invalid. Execution must effectively and efficiently perform that expected plan. Execution should utilize the methods defined during the planning Procedures phase. Because planning and execution correlates each other. Plans should be successfully performed by execution and execution phase should be taken efficiently and properly for it to avoid unnecessary cost and result as it expected to be. Planning and execution plays a vital role in all the phases of operational audit.
Eugene Mallari
CBET 01-503A
2019-102848
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
ReplyDeleteIf I were to choose a company in the Philippines that I really want to work with or to audit, that would be SM Investment Corporation. SM Investment Corporation is founded by the well known businessman Henry Sy, Sr. SM iInvestment Corporation is a leading and dynamic conglomerate with major investments in retail, banking and property in the Philippines that it highly centers its focus and synergistic group to continue to expand at an unparalleled scale in the Philippines with the view to tap into the growth potential of our core markets. SM Investment Corporation is because of their objectives and CSR. SM Investment Corporation objectives and Corporation is focused on initiatives to help its businesses grow sustainably while supporting and empowering its host communities through education, healthcare, agricultural, disaster response, farmer’s training, environmental programs and care for persons with special needs. Additionally, it helps the Filipino youth achieve their dreams by giving them better access to education through SM Foundation’s college and technical vocational scholarships and school building programs. And that's why I like to work with SM Investment Foundation. Since I was a child my dream is to work with a corporation where its not just profit centered but also focuses and helps livelihood and its fellow Filipinos. A corporation who's willing to extent their arms upon the people who need it.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
To ensure that operational audit procedure is effective and continuously provide a quality audit here's the checklist that should be maintain to produce an effective and efficient auditing:
1.Planning
• Gather accurate background information
• The auditor should obtain sufficient appropriate evidence for the circumstances.
• Auditors must keep audit costs at a reasonable level.
• Auditor must avoid misunderstandings with the client.
• Ensure that potential problems are promptly identified.
• The scope and audit must be properly known
• Swot Analysis
• Create an audit program
• Lay-out of the plan must be organized.
2. Fieldwork
• Conduct Interview
• identifying and analyzing the key risks within the process or system
• confirming the process and any controls in place to mitigate these risks
• evaluating the extent to which the controls in place do mitigate these risks
• testing the controls to confirm they are operating as intended
• Risk-based method must be implemented
• Review documentation and process
• Test transaction and documentation
3. Reporting
• Provide draft reports for comments
• Obtain corrective action plans
• Revise reporting with accurate information
• Must avoid misstatements and typos
• Reports must be presentable and clear
• Distribute final report to appropriate and required individuals
4. Follow-up
• Review corrective actions plan and result
• Interview staff
• Review new process and documentation
• Implement a better corrective action plan to provide more high quality audit
• Re-Audit
References:
Murdock, H. (2017). Operational auditing: Principles and techniques for a changing world. CRC Press.
The University of Texas Austin (n.d) Retrieved October 17, 2021 https://audit.utexas.edu/audit-process
SMIC (n.d) Retrieved October 17, 2021 https://www.sminvestments.com/about-us/our-investments/
Wiki accounting (n.d) Retrieved October 17, ttps://www.wikiaccounting.com/importance-audit-planning/
Mallari, Eugene S.
CBET 01-503A
2019-102848
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteEvery phase in the audit process is necessary to create a good audit plan, but of all the phases, the two phrases that I think are very important and should never be taken for granted are: the planning and reporting phases. Planning will be the most crucial phase in the audit process because it is when internal auditors will gather relevant information and create audit plans based on the results of the wide risk assessment.
Based on the proverb included in the book of Murdock (2017), “Failing to plan is planning to fail”. He stated that poor planning leads to inefficient auditing practices, which also means the success of the business comes from good and effective planning. That is why the planning phase requires more time because auditors need to study the results of the assessment from the selection phase and then, create audit plan which will help the business to have better internal policies and procedures.
The other important phase aside from the planning phase is the reporting phase. Although execution phase is essential for internal auditors to deliver regular observations, potential findings, and recommendations to clients, the reporting phase is when these regular observations, potential findings, and recommendations will be summarized in draft report and then be finalized by discussing it with their clients.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
The one company in the country I would like to audit is the San Miguel Corporation (SMC). SMC was established in the year 1890 as Southeast Asia’s first brewery. It is stated on their company website that SMC is “contributing an estimated 5.2 percent to the Philippines’ GDP”, which means that the company is profitable and is a high contributor in the Philippine economy. Having to audit a long-running company and one of the largest companies in the Philippines will be challenging because knowing that it is more than a decade operating, that means that their internal policies and procedures are somehow well planned, efficient and effective. If I am the internal auditor of the said company, I will be happy and professionally contribute to the betterment of its internal policies and procedures. Even though they are long-running, business trends and other company strategies will always be changing and it is my job to give relevant and timely recommendations in the auditing plan.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
San Miguel Company as my chosen company to audit. This operational audit checklist of procedures is based on Accountants Go Cardless (n.d.) to ensure that audit is effective. The checklist includes select and screen auditors, define audit plans and scope, pull together reference documents, identify administrative support, research operational procedures, collect statistical evidence, audit evidence from all sources, evaluate evidence, compile audit findings, share audit conclusions, give actionable advice and follow-up with questions and concerns. By using this checklist, it covers the 5 phases of the audit process and if used, then the audit plan will be systematically created.
REFERENCES
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 17, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. https://e-rtu.online/pluginfile.php/286094/mod_resource/content/1/Operational%20Auditing%20The%20Principles%20%20Techniques%20for%20a%20Changing%20World.pdf
Your World Made Better. (n.d.). San Miguel. https://www.sanmiguel.com.ph/smc-www/yourworldmadebetter.html
- JORLIE GILLEGO (2019-100665)
Planning and Execution phases are the most important phases that shall not be taken lightly in operational auditing. In planning phase, critical decisions must be made according to all the information that they have gathered, determine risks and find areas of growth within the business. An auditor must make sure about the accuracy because this will be the overall strategy that will be applied in the business, so ensuring the spots to focus on and what need to be improved is very important in auditing. Another phase is the Execution phase where discussion of all the observations, findings and recommendations will be communicated with the clients (Wandering CPA, 2021). In this phase the fieldwork will start and this means that everything that have made in the Planning process will be used as basis to the discussions between the auditor and the client. All of the phases of Operational Audit are important but these two phases must not be taken for granted because it will be the key progress for a better audit that will be conducted by an auditor. Assuring the credibility and truthfulness of all the actions done in these two phases it essential so that a client will be able to rely their trust on the audit that will be conducted.
ReplyDeleteIf I am an Auditor, the company that I would like to audit is the Nestle Corporation, this company is a Food and Beverages type of business and this is very important because it belongs to Food Industry. And I am curious about how the operations work in this company and areas to improve if there is one and because they are here in the Philippines for more than 100 years already that makes them one of the longest foreign companies that still currently exist here in our country. I would also like to know about the performance of this business, like how they treat their employees and how is the overall management of the flow of their operations works. I am also curious about how they manage to stay as one of the top corporations here in the Philippines. I also want to ensure that they’ll continue to exist here in the Philippines, although it is a foreign corporation, we cannot deny the fact that most of the brand of the food that we consume every day is nestle branded. It will also be going to be a huge loss for our country if they cease to exist because our country will lose one of the big foreign investments made by them in our country.
continue..
ROTONI, JOHANNA MARIE V.
CBET01-502A
2019-103691
Continuation..
ReplyDeleteIn this Company I will use the Auditor Evaluation Checklist from smartsheet.com (2017) as my basis in conducting an audit.
Review of records:
Analysis of the procedures done in different areas of their company
Analysis of treatment of their employees in Administrative and Factory area.
Analysis regarding customer and employee surveys.
Analysis of their record in terms of abiding the law.
Feedback:
Current Surveys
Personal preferences regarding the analysis conducted.
Testimonials, Complaints collected from the surveys.
Evaluation of their performance along with the conducted analysis.
Interview:
Conduct Personal Interview to verify all the information gathered.
Observation:
Observe all the verified information by looking for the most important area to focus on.
Conclude a possible solution or advice and communicate to the client.
Testing:
Testing out or the application of the solution agreed.
Post-Audit Review
Make a Follow-up review regarding the business performance during audit report.
Look for strength and weaknesses.
References:
Bhasin. (2020 April 13). What is Auditing? Four Phases of the Audit Cycle. Retrieved, October 17, 2021. https://www.marketing91.com/what-is-auditing-definition/
Marzouki. (2021 August 26). Nestlé Philippines at 110: Striving to be a stronger force for good. Retrieved, October 17, 2021. https://www.philstar.com/lifestyle/business-life/2021/08/26/2122564/nestl-philippines-110-striving-be-stronger-force-good#:~:text=MANILA%2C%20Philippines%20%E2%80%94%20From%20a%20modest%20sales%20office,worldwide%2C%20and%20is%20among%20the%20country%E2%80%99s%20top%20corporations.
Eby. (2017 September 19). Operational Audits 101: Processes, Examples, and Checklists. Retrieved, October 17,2021. https://www.smartsheet.com/operational-audit-process
Wandering CPA (2021 October 2). OPERATIONAL AUDIT: WHAT ARE ITS PHASES? Retrieved, October 17, 2021. https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
White Collar Accountant. (n.d.). Audit Planning: Audit Planning (Audit Strategy and Audit Plan). Retrieved, October 17, 2021. https://whitecollaraccountant.com/audit-planning/#:~:text=Importance%20of%20audit%20planning%201%20It%20helps%20the,%7Befficient%7Ca%20good%7D%20and%20efficient%20manner.%20More%20items...%20
ROTONI, JOHANNA MARIE V.
CBET01-502A
2019-103691
1/2
ReplyDeleteOperational auditing is defined as “a future-oriented, systematic, and independent evaluation of organizational activities” (Murdock, 2017). The definition mentioned the word systematic because in operational audit we are considering the policies and procedures entered into the operations of the organization assessing whether effectiveness and efficiency is present. As part of being systematic there is the existence of audit phases, despite there are many types of audit, the audit phases are similar in most engagements and these are: planning or the preliminary review, fieldwork or the project based work, audit report, and finally the follow-up review.
Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
Above I mentioned that there are four phases of auditing though in some reference there are five which includes the risk assessment but in substance, it will fall under the planning phase. These four phases: planning, fieldwork, audit report, and follow-up review are all needed in operational audit as the absence of one could affect greatly the effectiveness of the audit thus, affecting the assurance or the interpretations given to the board of directors. However, upon taking a close look the two phases that should never be taken granted for is:
The planning phase or the preliminary review phase because it serves as the outline of overall audit process, the phase where all succeeding phases are considering from time to time. Also, this phase is the start of the communication between the auditing team and the client, an early communication can lead to a good outcome. Furthermore, on this phase this is where the data gathering on the overall system takes place, the getting to know part of the process (Chicago State University, n.d.). Lastly, on this phase is the selection of auditing team and anticipation moment, these are important to establish as early as possible to lessen the hurdles that may face in the future. Imagine an act without a plan would be chaotic.
The second is the audit report phase, because this is the phase where the final report conducted. An audit would be worthless if there is no conclusion, what is the essence of overall process if you cannot gain anything from it. On this phase is the communication to the clients, presenting the recommendation and conclusion for further improvements.
- Alikhan James M. Permejo (2019-102651)
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ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
- Auditing is necessary in a business, especially if you run a large corporation. In operational auditing you need to undergo process or procedure that can help achieve the goal, which is to maximize the efficiency of a company. The audit phase or process has four stages: Planning, Fieldwork, Reporting and Follow-Up (Murdock, 2021). These audit phases has its own purpose towards the success of a company. All of the phases in operational auditing are essential in the auditing process but from my perspective the two phases that should never be taken for granted is the planning and reporting. In every success, we must first plan. Planning is important because it helps us identify our goals clearly. Organizing and planning ahead of time helps us to be more efficient and productive. Planning is the most significant part of an audit. It includes scoping, budgeting, defining the population of interest, how testing will be performed, and announcing the audit (Murdock, 2021 p. 36). Communication of results often referred to as reporting. It consists of communicating findings, observations, and best practices noted during the review, and developing recommendations for corrective action (Murdock, 2021 p. 54). The audit report is the engagement's deliverable product. This written report provides a review of the specific audited area as well as positive and negative audit observations. Before the final report is produced, audit clients will have the option to evaluate and make input on the wording to ensure correctness. The report is important since this is the where they can recommend and decide what are the actions they will do to improve the business operation.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
- I would like to audit the Ayala Corporation. We all know that Ayala Corporation is one of the most successful companies here in our country. Most of their business interest includes investments in retail, education, real estate, banking, telecommunication, water infrastructure, renewable energy, electronics information technology, automotive, healthcare, management and business process outsourcing. I am interested to them because I want to see and understand how they manage to become successful and reach what they are now. I want to study and audit their business's internal policies and procedures. If I would be given the opportunity to work with them as an internal auditor, I will ensure that I will provide an effective audit that can lead to additional insight, which could also lead to better production processes, and much more efficient systems.
- Loven B. Boado (2019-105729)
To truly gain a good picture of whether the company is operating efficiently, effectively and get fresh ideas of how to improve businesses and other organizations, they follow the Five phases of auditing - Selection, Planning, Execution, Reporting, and Follow up. Every single phases of auditing plays a vital part in the success of the business but the two phases that I think are very important and should never be taken for granted are the Planning and Fieldwork phase. The planning phase of a financial statement audit is arguably the most important step and is a vital area of the audit primarily conducted at the beginning of audit process to ensure that appropriate attention is devoted to important areas, potential problems are promptly identified, work is completed expeditiously and work is properly coordinated. It is important for clients to understand the planning phase of an audit and why it is crucial for a successful and efficient audit. Planning phase entails familiarization with the objectives, processes, risks and controls of the audit team and activity to be audited, and developing a strategy and approach in conducting the audit. Additionally, adequate planning helps identify and resolve problems on a timely basis and allows the auditor to organise the engagement, including selecting suitably experienced team members to deal with specific risks, so that it can be performed in an effective and efficient manner. During the fieldwork phase, auditors conduct the steps identified in the planning process. Fieldwork includes all efforts to accumulate, classify, and appraise information so that we can express an opinion and provide recommendations for improvement. Fieldwork implies measurement and evaluation and the existence or development of standards.
ReplyDeleteThe Covid-19 pandemic has shown us clearly that the Internet is no longer a luxury, a convenient enhancement for lifestyles for those who can afford it. Rather, Internet access has become a basic necessity. When lockdowns were imposed to contain the spread of the SARS-CoV2 virus, education provision moved online. Universities also moved teaching and tutoring online, which created problems for those students without any or adequate Internet access. In lockdown, most people are only able to work if they can do so online. Those without online access are not even able to apply for positions that would allow them to work via the Internet. That’s why the company that I want to audit is PLDT, Inc., one of the DSL and fiber internet broadband providers in the Philippines. I want to audit PLDT to know the cause of the slow Internet connection and the high cost that end-users pay for it. Also, to help auditors to provide good services through giving enough information that can lessen the worries of the PLDT users.
To ensure the audit is conducted systematically, comprehensive manner and that adequate evidence is obtained, GoCardless gives the list of the operational audit checklist that needs to be considered before doing the audit and giving the recommendation: Select and screen auditors, Define audit plans and scope, Pull together reference documents, Identify administrative support, Research operational procedures, Collect statistical evidence, Audit evidence from all sources, Evaluate evidence, Compile audit findings, Share audit conclusions, Give actionable advice and Follow up with questions and concerns. With this checklist, dramatically reduces errors and omissions and improves safety. And it allows me to focus on more activities or tasks that will help the business operates well.
References:
Lutz Business Insights. (n.d). Why the Planning Phase of a Financial Statement Audit is Important. Retrieved October 15, 2021, from https://www.lutz.us/why-planning-phase-financial-statement-audit-important/
Go Cardless. (n.d.). What is an operational audit?. Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
TICALA, JOYLYN L. | 2019-103552
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ReplyDelete3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
- To be able to become an effective and efficient auditor, we must provide an operational audit checklist. “Checklists vary based on the purpose, audit type, and audit criteria. However, the audit process and auditing principles remain constant” (Kandarpa, 2017). This checklist is the PDCA checklist. PDCA stands for plan, do, check and act. In the planning stage you must select competent auditors, screen auditees, define audit plans and procedures, define purpose and scope. Under the do stage, you must reference the documents, identify administrative and infrastructure support, collect information, audit evidence. On the other hand, the check stage, you must evaluate against criteria, audit findings, review findings. And finally, under the act stage, you must present report with conclusions and actionable information, follow-up to answer questions or concerns, follow-up audit. This checklist would be a great help for you to achieve your goal.
References:
Murdock, H. (2021). Operational auditing: Principles and techniques for a changing world. CRC Press.
Kandarpa, S. (2017, September 19). Operational audits 101: Processes, examples, and checklists. Smartsheet. Retrieved October 15, 2021, from https://www.smartsheet.com/operational-audit-process.
GoCardless. (n.d.). What is an operational audit? United Kingdom. Retrieved October 15, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/.
Wikimedia Foundation. (n.d.). Ayala Corporation. Wikipedia. Retrieved October 15, 2021, from https://en.m.wikipedia.org/wiki/Ayala_Corporation.
- Loven B. Boado (2019-105729)
2/2
ReplyDeleteThe specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I were given a chance to audit a company, I would pick San Miguel Corporation because this company was established long ago and one of the largest conglomerate in the country and the company whose major business groups are the leaders in each of their field. Any business groups of San Miguel Corporation are interesting to audit but recently the San Miguel Infrastructure caught my interest since this group is actively in partnership with the government providing development in the country as witnessed by the road projects, transportation and even clean-up drives. In addition to that San Miguel is one of the cornerstone of the economy of our country and I like how they treat their employees providing incentives every month.
Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
In auditing San Miguel Corporation, these are the checklist to have an effective audit:
1. Selecting competent auditors
2. Discussion of the scope and objectives of the examination
3. Anticipation of reference documents
4. Audit evidence from all sources
5. Evaluate evidence
6. Organization of audit findings
7. Reporting of audit findings and conclusions
8. Treatment
9. Follow-up report
Reference:
Chicago State University (n.d.). Audit Process. https://www.csu.edu/internalaudit/auditprocess.html
Gocardless (n.d.). What is operational audit? https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing World. Taylor & Francis Group, LLC.
- Alikhan James M. Permejo (2019-102651)
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ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
I have learned that the benefit of the auditing procedure is derived from the methods itself. Auditors can achieve more than just adherence to professionalism by diligently collecting a plethora of client data; they can also help to reduce professional liability risk by facilitating more efficient engagements on each project. Of all the phases of Operational Audit, in my own perspective, planning and fieldwork phases should never be taken for granted. In every audit necessitates planning, from defining the scope and goal to creating audit processes to achieve the goal. Internal audit meets with management at the start of the audit to review the audit's goal, risk factors, and other logistics. The planning phase includes management, and the specifics are formalized in a strategy and scoping document. Also, auditors carry out the actions outlined in the strategic planning during the fieldwork phase. Interviews, examining laws, rules, and best practices, validating sample transactions, evaluating data sets, and conducting surveys are all common steps. During fieldwork, auditors meet with management on a regular basis to review the progress of the audit, preliminary observations, and any suggestions. I see these two phases play the critical roles in operational auditing and auditors have to be careful and discern in conducting these procedures.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
I would like to conduct an audit on Philippine Health Insurance Corporation (PhilHealth) because this department went under fire when news came out that there was an anomaly happening and as an auditor, we are entrusted to help give trustworthy and dependable information to aid in better decision-making for the entity or government that we will be auditing. Most important thing about this is that PhilHealth is for the common good of all Filipinos. Our fellowmen deserve to know what happened during the stages because this is a public department.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
In order to us to conduct a successful audit, I would like to consider the operational audit checklist of procedures presented by Kate Eby who wrote “All About Operational Audits” Smartsheet (2017) but before that we must remember the audit processes.
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ReplyDeleteAccording to Eby (2017),
• Establishing Objectives: Base objectives on management goals and priorities. Consider the characteristics of products, projects, processes, and any changes to them. Take into account management system requirements, contractual and legal requirements, and other requirements. Evaluate suppliers and the needs and expectations of interested parties, including customers. Take into account the auditee’s level of performance, risks, previous audit results, and the maturity of the management system being audited.
• Establishing the Audit Program: Identify the responsibilities of the audit program manager and establish his or her competence of the person. Determine the scope and potential risks, then set procedures and identify resources.
• Implementing the Audit Program: Define the objectives, scope, and criteria, and select the audit team members and assign responsibility to the audit team leader. Manage the outcome and records.
• Monitoring the Audit Program: Assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team members and the ability of the audit teams to implement the plan. Evaluate feedback of all stakeholders. Some factors can determine the need to modify the program, including audit findings, the demonstrated level of management system effectiveness, and changes to the auditee’s management system, standards, and other requirements.
• Reviewing and Improving the Audit Program: Evaluate if objectives have been achieved. Use lessons learned as inputs for continual improvement. The review should consider results and trends, conformity with procedures, the evolving needs and expectations of interested parties, records, alternative or new auditing methods, the effectiveness of the measures to address associated risks, and confidentiality and information security issues relating to the audit program.
Furthermore, these are the checklist provided by Eby (2017) whom I will be following;
• Plan
Select competent auditors
Screen auditees
Define audit plans and procedures
Define purpose and scope
• Do
Reference documents
Identify administrative and infrastructure support
Collect information
• Audit
Audit evidence
• Check
Evaluate against criteria
Audit Findings
Review Findings
• Act
Present report with conclusions and actionable information
Follow-up to answer questions or concerns
Follow-up audit
References:
Eby, K. (n.d.). All About Operational Audits | Smartsheet. Smartsheet. https://www.smartsheet.com/operational-audit-process.
- LUIB, BEVERLY JANE B. 2019-105706
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ReplyDeleteJoseph Ian C. Yap
2019-106172
CBET-01-503A
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
For me, operational audit phases are all significant because it is a process that needs to follow. But, if I need to choose at least two operational audit phases, I would choose the planning and execution phases. It is crucial to have a plan in any circumstances because it establishes the audit plan for the following year based on the outcomes of this evaluation and the department's available resources. Plan each project, gather essential data, contact clients to identify risks, and set the audit's goals and scope, including the fieldwork timeline and report distribution. It is critical to have a plan in place, both personally and professionally. Planning defines how we will analyze and study the objectives and goals. Also, how we will achieve them. It is a strategy for deciding what we will do and why. It assists us in attaining our aims and allows us to make more immeasurable use of our time and other resources. Tom Landry said,'' Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan. '‘. The planning is crucial but, without execution, it's nothing, and likewise, execution without planning is nothing. It is like making a dish without knowing the recipe. The internal audit team conducts fieldwork following the audit plan. Regular status meetings keep clients informed about the audit process. As significant as audit observations are potential occurrences and suggestions.
2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I give a chance to audit one company or government agency here in the Philippines, I will choose the Bureau of Customs because it is the most corrupt agency, and the most common problem in custom that I want to scrutiny are the following;
• Misclassification
• Duties higher than anticipated
• Customs office won't clear the shipment to your buyer/importer
• Customs office invoking health, sanitary, or safety issues
• Labeling issues involving a certificate of origin, weight, ingredients, marks, etc.
• Inadequate documentation provided by the exporter
• Issues regarding the import or packing regulations of the receiving country
(According to Privacy Shield framework in the United States)
Bureau of customs is known for smuggling, fraud, and national security problems. I want to exploits all the unlawful activities and to see all their operations how does it work. I want to examine the process of importing and exporting goods and to know the BOC's failure to protect our country from illegal contraband, particularly drugs, and its ability or inability to collect the appropriate taxes. Any attempt to divert attention away from this critical issue is a disservice to the country.
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ReplyDelete1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
Every business or organization wants to achieve its specified goals and objectives. Who would not want right? Frankly, it is easier said than done since there are lot of factors that prevents the organization in achieving its objectives. It may be hard to achieve but it doesn't mean it is unreachable, thus this is where operational auditing comes in handy. Through operational audit it will determine the factors affecting organizations' operation towards achieving the organizational objectives. Operational auditing is being done systematically, hence it follows audit processes or phases. The audit phases would consist of - selection, planning, fieldwork, reporting and follow-up (University of Oregon, n.d.). These phases serve as guidelines for operational auditor to execute their work properly. I believe all these phases are as important as the other, however if I were to choose two among these phases that should not be taken granted for, that is the planning and fieldwork phases.
The planning phase serve as the conceptual framework of the operational audit. According to (Chicago State University, n.d.), during the planning portion of the audit, the auditor notifies the client of the audit, discusses the scope and objectives of the examination in a formal meeting with organization management, gathers information on important processes, evaluates existing controls (when existing narratives and flow charts are available) and plans the remaining audit steps. Management is included in the planning phase and the details are documented in a planning and scoping memo (University of Oregon, n.d.). Planning is an important phase as it will the basis of the preceding phases. Additionally, I choose fieldwork as the other important phase because it has a direct relation to planning. Meaning without the planning phase there is no fieldwork or execution to be done. And during this phase, auditors conduct the steps identified in the planning process. Steps often include conducting interviews, reviewing laws, policies and best practice, verifying sample transactions, analyzing data sets, and conducting surveys. Auditors meet regularly with management throughout fieldwork and discuss the status of the audit, preliminary observations, and potential recommendations (University of Oregon, n. d.). Failure to conduct these two phases properly will more likely result to an unfavorable audit report.
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ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
If I were to audit a company, I would choose the Ayala Land Incorporation. It is a real estate firm based in the Philippines and it is a subsidiary of the Ayala Corporation. Since it is not just the largest but also the leading land developer of the country, I want to know how do they keep their position, know their existing policies and procedures, and the conduct of its operation. It would be privilege to audit such company.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
Providing an operational audit checklist of procedures would ensure an audit to be effective. And the operational audit checklist of gocardless.com would be my basis. (1) Select and screen auditors; (2) Define audit plans and scope; (3) Pull together reference documents; (4) Identify administrative support; (5) Research operational procedures; (6) Collect statistical evidence; (7) Audit evidence from all sources; (8) Evaluate evidence; (9) Compile audit findings; (10) Share audit conclusions; (11) Give actionable advice and; (12) Follow up with questions and concerns. Operational audit checklist differs based on the type of business being audited.
REFRENCES:
Chicago State University. (n.d.). Audit Process. Retrieved October 17, 2021 from, https://www.csu.edu/internalaudit/auditprocess.htm
Accountants Go Cardless (n.d.). What is an operational audit? Accessed October 17, 2021. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
University of Oregon. (n.d.). Audit Process. The office of Internal Audit. Retrieved October 17, 2021 from, https://internalaudit.uoregon.edu/report/audit-process
TANDAYU, LEXTER M. (2019-106755)
CBET-01-503A
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ReplyDeleteJoseph Ian C. Yap
2019-106172
CBET-01-503A
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective
Procedures to ensure that is effective are the following; phases of operation audits;
Planning
• Defines audits to perform
• Perform risk management/assessment
• Designate timeline and resources
• Preparation
• Audit plan
• Review and set-up planning meeting
Execution
Testing performed includes:
• Interviewing
• Documenting
• Applying testing methodologies
• Managing fieldwork
• Providing status updates
• Determining the process designed is effective
• Verifying the controls and performance of management
Reporting
• Communication of results
• Communicating findings, observation, and best practices during the review and developing recommendations for corrective actions
Follow-up
• Evaluation of adequacy, effectiveness, and timeliness
• Determining the risk of not taking the corrective actions
• Checking the corrective action
• Checking the issue reported
• Review
To resolve customs problems, try the following:
• Involve the buyer/importer. Chances are they can help or at least find out what needs to be done to resolve the problem.
• Involve your shipping company. Most shippers are responsive to the customs problems faced by their customers.
• Involve your insurance company.
• Contact the foreign customs' office.
• Contact the Commercial Service office in the appropriate country.
(According to Privacy Shield framework in the United States)
REFRENCES
J. Curay (2021). Auditing: Objectives & Phases of Operational Audits 09112021 by MJBC. Retrieved October 16, 2021. From: https://www.youtube.com/watch?v=7aUabD77FvI&t=326s
KU Internal Audit (N.D.). The Audit Process. Retrieved October 16, 2021. From: https://internalaudit.ku.edu/project-process
Primary Shield Framework (N.D.). 2-Customs Problems. Retrieved October 16, 2021. From: https://www.privacyshield.gov/article?id=Customs-Problems
Inquirer.net (2017). Real issue behind the BOC controversy. Retrieved October 16, 2021. From: https://opinion.inquirer.net/106129/real-issue-behind-boc-controversy
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ReplyDelete1) The operations audit has five phases. Each phase is significant as they should be done accordingly and systematically. From the selecting of staff members and planning of the project to the following up of all the audit reports and findings within a year is important as the internal auditors conduct the auditing of the operations. But if I will only choose at least two of them, then I will say that planning, execution and reporting phases are the most vital that should not be taken for granted. As we all know planning is the first step in every process or activity an organization does. There is also a saying from Benjamin Franklin, “If you fail to plan, you are planning to fail”. It only means that if you don’t make a plan there is a big possibility that you will fail in the end because there’s no path and directions that can guide the organization. Going to a fight without any plans what to do will be defeated. That’s why it is important for a company and the internal auditing department to make a plan first. Gather all the information needed in auditing, determine and identify the possible risks and also study how to resolve them. Creating some strategies that may help them to maximize the effectiveness and efficiency of the productions and operations of the company. Next is the execution phase, this phase is when the testing or the implementation of what is on the audit plan is performed. It includes interviewing, documenting, applying testing methodologies, managing fieldwork, and providing status updates (Murdock, 2017). It pertains to the determining of the processes if they are effective and verifying the controls in place if they are still performing according to the management. Reporting phase is also vital because it is where the interpretation and discussion of the audit report happens. There is a communication of results and findings. Observing and reviewing the audit performed by the team to ensure if they are doing the right thing for them to provide a reasonable assurance for the entity to decide about their operations’ procedures and policies. The operations auditors can give their recommendations to the company for them to have a successful production and operations.
2) If I am going to be an operations auditor, I want to audit the company of Nestle Philippines. I know that Nestle is really a big company, but because it is really popular and I’ve known their products since I was a child I want to experience how to work in that company. Also, I have professors who mentioned their work experience in the Nestle Company and gave positive feedbacks, that is why one of my dreams is to work in that company. I can use my skills and understanding about operational auditing and I can apply the things I’ve learned about auditing. But surely, I can also gain more knowledge about their operations and productions and experience new opportunities when I work as an operations auditor in their company.
---CARANDANG, Celine D. (2019-104928)
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ReplyDelete3) To ensure the effectiveness and efficiency of the audit, there should be a checklist of procedures. First is the preparation of audit, where we define the purpose and scope of the audit. Determining the resources to be used and identify the standards of the performance to be used. An internal auditor in the Nestle Company should review the audit program and ensure that the functions are still adequately resourced and has appropriate standing within the company, also, to review and monitor management’s responsiveness to the internal auditor’s findings and recommendations. While there are 8 steps to a successful audit according to mvorganizing.org (Davis, 2021)
1. Plan ahead
2. Stay up-to-date on accounting standards
3. Assess changes in activities
4. Learn from the past
5.Develop timeline and assign responsibility.
6. Organize data.
7 Ask questions.
8. Perform a self-review.
References:
Audit Committee Charter of Nestlé S.A. (2015). The audit committee charter. https://www.nestle.com/sites/default/files/asset-library/documents/investors/others/audit-committee.pdf
Davis, B. (2021). What are the strategies of Nestle company? https://www.mvorganizing.org/what-are-the-strategies-of-nestle-company/
Grabillo, M. A. (2021, October 2). Glimpse of a CPA’s mind. Operational audit: What are its phases? https://markgrabillo.blogspot.com/2021/10/operational-audit-what-are-its-phases.html
Murdock, H. (2017). Operational auditing: The principles techniques for a changing world (1st ed.). Auerbach Publications. https://doi.org/10.1201/9781315368733
--- CARANDANG, Celine D. (2019-104928)
In the first week of studying operational auditing, we learned what is the importance of operations audit. In this topic we will talk about the different phases of operational auditing and There are five phases of audit process: Selection, Planning, Execution, Reporting, and Follow-up. Following these five phases of auditing helps the auditor to assess if the policies and procedures of the business is still effective and efficient in the operation. operational audits are linked to identifying the specifics that reveal the strengths and weaknesses of an organization's daily strategic approaches. To summarize, the entire process of operational auditing appears tiresome and may take a long time, but the auditor can make it easier for himself by immediately designing and extracting the process. All of this is achievable because we've learnt that the purpose of an audit is to obtain useful information, clarify management policies, and maintain the company's peak performance.
ReplyDeleteNow let’s talk about the 2 phases that is very important for me and should not be taken for granted. First one is the planning phase because in this phase Planning the audit includes establishing the overall audit strategy for the engagement and developing an audit plan. auditors are able to effectively evaluate the relevant risks associated with the audit process so that they can strategize, and come up with ways to mitigate the risk. Inclined with my first choice is that in the field work phase, auditors meet with management on a regular basis to discuss the status of the audit, preliminary observations, and potential recommendations. In This phase it includes the assessment of the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. The reason for me to pick this 2 is that in every plan we must always perform accurately so there is less margin of errors in doing so.
Next to talk about is the company I want to conduct audit in. The company I pick is BPI because I am very interested in working with banks. Also, another reason is that there is a lot of money involve in doing this so proper operational audit is indeed needed in this company. Properly assessing the different phases of operational audit, I know that those phases is a big help for different company especially for those who will start and those company that is big now adays.
Different companies have different kind of operational audit checklist. And for what I have read operational checklist are based on different kind of business and scope of the audit. In the company I pick base on what I have search BPI company have done the selection process by properly selecting good auditors and distributing them to their specific places. By doing so those people who are selected and disturbed to different task can properly manage their task. After that they build audit plans and scopes so they can properly access on what to do and what will happen in the near future because this cand lead them to at least lessen the risk that can occur in their company. Next up is they collect reference documents, identify administrative support, do research, develop operational processes, collect statistical data, audit evidence from all sources, and assess the evidence because all this date can help them assess on what had happen, happening and can happen in the near future. Compile audit findings, present and discuss conclusions, offer practical advice, and respond to questions and concerns after that.
Reference:
Office of Internal Audit. (n.d.). Audit Process | The. https://internalaudit.uoregon.edu/report/audit-process
GoCardless. (n.d.). What Is an Operational Audit? Retrieved October 16, 2021, from https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/#operational-audit-checklist
Sinra Kong, ACCA, CPA (2021). Importance of Audit Procedures. Wiki Accounting.com. https://www.wikiaccounting.com/importance-audit-procedures/
1. Of all the phases of Operational Audit, list at least two phases that you think are very important and should never be taken for granted?
ReplyDeleteThe five phases of operational auditing are critical to achieving the goal of improving efficiency and effectiveness. However, I believe that the planning and implementation phases of operational auditing should not be taken for granted. The planning phase of a financial statement audit, according to Lutz (1980), is possibly the most vital step. A financial statement audit can give many benefits to a company if it is properly prepared. Even though this phase can cost the client and the audit team a lot of time and money, and can feel overwhelming or unnecessary at times, once all of the necessary information is provided, the client can save time and money in the long run, and if completed thoroughly, it will most likely result in increased efficiencies for the company. Planning the audit also includes planned risk assessment techniques and prepared remedies to major misstatement risks, according to the PCAOB. This will aid in gaining a better understanding of your firm and its surroundings, as well as mitigating risk. Once the audit is planned, the execution or fieldwork will be performed based on the steps identified in the planning process. This phase includes assessing the adequacy of internal controls and compliance, testing of transactions, records, and resources, and performing other procedures necessary to accomplish the objectives of the audit. Throughout the audit, audit clients will be informed of the audit process through regular status meetings and/or communications. The audit team makes every effort to discuss audit observations, potential issues, and proposed recommendations as they are identified. In some instances, it is necessary to work directly with audit clients to determine or validate the root cause and discuss ways to eliminate the root cause. These two phases are integral parts of an organization's overall process for reaching its objectives.
Bianca Marie Aplacador
2019-106307
CBET-01-503A
Continuation:
ReplyDelete2. The specific areas of scrutiny in an operational audit will depend on the type of business being audited. Choose at least one (1) company in the Philippines you would like to audit and why?
San Miguel Corporation is the company I would choose to audit if I had to pick just one in the Philippines. San Miguel Corporation, as we all know, is one of the Philippines' top and most successful firms, contributing significantly to the country's economic success. Beverages, food, packaging, fuel and oil, energy, infrastructure, mining, real estate, and aviation are among its many operations. Knowing that this company has benefited a lot of people through the goods and services it produces, as well as employing thousands of people and contributing to the Philippines' GDP, I'd like to be involved in the San Miguel Group Audit and help the company achieve its goals and objectives while also improving the effectiveness and efficiency of its operations.
3. Of the chosen company you want to audit in number 2 above, provide an operational audit checklist of procedures to ensure that audit is effective.
To complete the internal audit of the San Miguel Corporation accurately and efficiently, the internal audit checklist provided the list of processes to follow. According to Go Cardless, the operational audit checklist includes selecting and screening auditors, defining audit plans and their scope, pull together reference documents, identify administrative support, research operational procedures, collect statistical evidence, audit evidence from all sources, evaluate evidence, compile audit findings, share audit conclusions, give actionable advice, and follow up with questions and concerns. Following this checklist will guarantee the efficiency and effectiveness of the audit result.
References:
Lutz. (1980). Why The Planning Phase of a Financial Statement Audit is Important. https://www.lutz.us/why-planning-phase-financial-statement-audit-important/
Office of Internal Audits (n.d). The Audit Process. https://audit.utexas.edu/audit-process
Go Cardless (n.d) What is an Operational Audit. https://gocardless.com/en-us/guides/posts/what-is-an-operational-audit/
Public Company Accounting Oversight Board. AS 2101: Audit Planning. https://pcaobus.org/oversight/standards/auditing-standards/details/AS2101
Bianca Marie Aplacador
2019-106307
CBET-01-503A
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ReplyDeleteDiscover top-tier financial expertise with an Financial Auditor in Philippines. Gain valuable insights and professional guidance for your business. Ensure financial compliance and optimize your operations with the help of experienced professionals in the heart of the Philippines. Your success begins here.
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