Assignment:
Planning Phase
• In the Planning Phase, you will determine the sources of information to be gathered in order to investigate the areas you have identified. For example, if you believe that some of the financial data should be looked at, then the Annual Report would be the source of information. Perhaps an organization chart needs to be (hypothetically) requested, or policies and procedures manuals. Perhaps a physical inspection or interviews are needed in order to gather the necessary information.
• In this phase, you will need to identify where and how you will gather the information you will need. Review page 60 in your Reider text for types of information you may want to gather and page 61 for possible sources of this information. In page 62 of your text gives some great examples of possible work steps, so be sure to look at these and see if they might fit into your operational audit.
To assist you with the analysis and getting some ideas flowing, consider the following topics for discussion within your group:
• Corporate Culture
• Does the culture of a firm get reflected in its appetite for risk or vice versa?
• Is there an audit plan to account for culture; is culture a control or lack thereof?
• Is it healthy to have aggressive growth targets?
• How healthy do you think the corporate culture of your company is after reading the annual report and articles?
• Can you tell what the "tone at the top" is in your company?
• Expense to Revenue
• Is the review of expense ratios to revenue growth a financial audit or an operational audit?
• Should competitor performance or industry trends be a factor for an operational auditor?
• Is your company on par with, ahead of, or lagging behind its competition?
• The Accounting Department/Internal Audit/External Audit
• Discuss the pros and cons of the relationship and competency of these functions.
• Does it seem like these functions are segregated enough and independent, or does it look like improvements could be made?
• Senior Management
• Is the competency of senior management an operational audit opportunity?
• Is segregation of duties an operational audit opportunity?
• Audit Independence and Relationship with External AuditorYou will want to answer these questions as you analyze the information that you are able to find about your company, and then integrate them into your document. Use the Internet, textbooks from other courses you have taken, or other references, but be sure to reference them either within the document or at the end. Keep in mind such things as benchmarking and risk management, and do your research.