Post on 07-Aug-2018
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OTHER CONSULTANCY
SERVICES
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OPERATIONAL AUDITING
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OPERATIONAL AUDITS
•
Management/Performance Au!t• Conucte to e"a#uate t$e egree
of e%ect!"ene&&' e(c!enc) an
econom) of o*erat!on&• Ma+!ng recommenat!on& on
econom!c an e(c!ent u&e of
re&ource&' e%ect!"e ac$!e"ementof ,u&!ne&& o,-ect!"e& ancom*#!ance .!t$ com*an) *o#!c!e&
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E00ECTIVENESS
• Ent!t) or !t& un!t&1 &ucce&& !nac$!e"!ng !t& goa#& an o,-ect!"e&
• 2efore an o*erat!ona# au!t for
e%ect!"ene&& can ,e *erforme't$ere mu&t ,e &*ec!3c area for .$at!& meant to ,) e%ect!"ene&&
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E00ICIENCY
• Refer& to $o. .e## an ent!t) u&e& !t&re&ource& to ac$!e"e !t& goa#&
• De&cr!,e a& reuc!ng co&t .!t$outreuc!ng e%ect!"ene&&
ECONOMY4 refer& to ent!t)1& &ucce&& !nma5!m!6!ng t$e u&e of !t& #!m!tere&ource& to ac$!e"e !t& goa#& ano,-ect!"e&
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Objective of operational audit7 g!"ea&&urance to t$e management t$at e"er)
com*onent of an organ!6at!on !& .or+!ng toatta!n t$e organ!6at!on1& goa#&
Scope of operational audit7
a Economy and eciency au!t4 eterm!ne.$et$er an ent!t) !& ac8u!r!ng' *rotect!ng'
an u&!ng !t& re&ource& econom!ca##) ane(c!ent#)9 eterm!ne t$e cau&e& of!ne(c!enc!e& an uneconom!ca# *ract!ce&9an .$et$er t$e ent!t) $a& com*#!e .!t$#a.& an regu#at!on& concern!ng matter& of
econom) an e(c!enc)
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, Program audits4 to eterm!ne t$ee5tent to .$!c$ t$e e&!re re&u#t& or,ene3t& e&ta,#!&$e ,) t$e#eg!ature or ot$er aut$or!6!ng ,o)are ,e!ng ac$!e"e9 t$e e%ect!"ene&&
of organ!6at!on&' *rogram&' act!"!t!e&'or funct!on&9 an .$et$er t$e agenc)$a& com*#!e .!t$ #a.& an
regu#at!on& a**#!ca,#e to t$e*rogram
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c Compliance audit: te&t!ng anre*ort!ng .$et$er an organ!6at!on
$a& com*#!e .!t$ t$e re8u!rement&of "ar!ou& #a.&' regu#at!on& anagreement&
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D!&t!nct!on 2et.een O*erat!ona#Au!t!ng :OA; an 3nanc!a#
Au!t!ng :0A;• Pur*o&e of t$e au!t
a 0A em*$a&!6e& .$et$er $!&tor!ca#
!nformat!on .a& correct#) recore9OA em*$a&!6e& e%ect!"ene&&'e(c!enc)' an econom)
, 0A !& *a&t or!ente 9 OA !&concerne .!t$ o*erat!ng*erformance for t$e future
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D!&t!nct!on 2et.een O*erat!ona#Au!t!ng :OA; an 3nanc!a#
Au!t!ng :0A;• Nature an D!&tr!,ut!on of Re*ort
a 0A re*ort goe& to u&er& of 3nanc!a#
&tatement&9 OA re*ort are !ntene*r!mar!#) for management
, 0A re*ort !&c#o&ure& are .e##4e3neue to .!e&*rea !&tr!,ut!on of re*ort9
OA re*ort& "ar) con&!era,#) from au!tto au!t of t$e !"er&e nature of au!tfor e(c!enc) an e%ect!"ene&&
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D!&t!nct!on 2et.een O*erat!ona#Au!t!ng :OA; an 3nanc!a#
Au!t!ng :0A;• D!&t!nct!on of Non43nanc!a# Area&
0A1& are #!m!te to matter& t$at
!rect#) a%ect t$e fa!rne&& of3nanc!a# &tatement *re&entat!on9OA1& co"er an) a&*ect of e(c!enc)an e%ect!"ene&& !n an organ!6at!onan can t$erefore !n"o#"e a .!e"ar!et) of act!"!t!e&
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TYPES O0 OPERATIONAL AUDITS4
c S*ec!a# a&&!gnment&4ar!&e at t$ere8ue&t of management T$!&!nc#ue& eterm!n!ng t$e cau&e of!ne%ect!"e EDP &)&tem'
!n"e&t!gat!ng t$e *o&&!,!#!t) of frau!n a !"!&!on' an ma+!ngrecommenat!on& for reuc!ng t$e
co&t of manufacture *rouct
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Act!"!t!e& of Interna# Au!tor& !n an O*erat!on Au!t
• Re"!e. on t$e re#!a,!#!t) an !ntegr!t) of
3nanc!a# an o*erat!ng !nformat!on ant$e mean& u&e to !ent!f)' mea&ure'c#a&&!f)' an re*ort &uc$ !nformat!on
• Re"!e. t$e !nterna# contro# &tructuree&ta,#!&$e to en&ure com*#!ance .!t$t$o&e *o#!c!e&' *#an&' *roceure&' #a.& anregu#at!on& .$!c$ cou# $a"e &!gn!3cant
!m*act on o*erat!on& an re*ort& &$ou#eterm!ne .$et$er t$e organ!6at!on !& !ncom*#!ance
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Act!"!t!e& of Interna# Au!tor& !n an O*erat!on Au!t
• Re"!e. t$e mean& of &afeguar!ng a&&et& an'a& a**ro*r!ate' "er!f) t$e e5!&tence of &uc$a&&et&
• A**ra!&e t$e econom) an e(c!enc) .!t$.$!c$ re&ource& are em*#o)e
• Re"!e. o*erat!on& or *rogram& to a&certa!n.$et$er re&u#t& are con&!&tent .!t$ e&ta,#!&$eo,-ect!"e& an goa#& an .$et$er t$eo*erat!on& or *rogram& are ,e!ng carr!e outa& *#anne
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GOVERNMENT AUDITORS4 concerne .!t$,ot$ 3nanc!a# an o*erat!ona# au!t'referre a& *erformance au!t .$!c$!nc#ue& econom) an e(c!enc) au!t an*rogram au!t
CPA 0IRMS4 t$e ,ac+groun +no.#ege a,out
a c#!ent1& ,u&!ne&& t$at an e5terna# au!tormu&t o,ta!n !n o!ng an au!t *ro"!e&u&efu# !nformat!on for g!"!ng o*erat!ona#recommenat!on& T$e management
con&u#t!ng &ta% of CPA 3rm& u&ua##)*erform& o*erat!ona# au!t for one or more&*ec!3c ,u&!ne&& *art& of t$e c#!ent
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IMPORTANT >UALI0ICATIONS O0 OPERATIONAL AUDITORS
•
Ine*enence – Au!tor &$ou# not ,e re&*on&!,#e for *erform!ng
o*erat!ng funct!on& !n a com*an) or for correct!nge3c!enc!e& .$en !ne%ect!"e or !ne(c!ent o*erat!on&are foun
– It !& acce*ta,#e for au!tor& to recommen c$ange& !no*erat!on' ,ut o*erat!ng *er&onne# mu&t $a"e t$eaut$or!t) to acce*t or re-ect t$e recommenat!on&
– If au!tor& $a t$e aut$or!t) to re8u!re!m*#ementat!on& of t$e!r recommenat!on&' t$e
au!tor .ou# actua##) $a"e t$e re&*on&!,!#!t) forau!t!ng $!& or $er o.n .or+ t$e ne5t t!me an au!t .!##,e conucte Ine*enence .ou# t$erefor ,ereuce
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IMPORTANT >UALI0ICATIONS O0 OPERATIONAL AUDITORS
•Com*etence – Nece&&ar) to eterm!ne t$e cau&e of
o*erat!ona# *ro,#em an ma+ea**ro*r!ate recommenat!on&
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CRITERIA 0OR EVALUATING E00ECTIVENESSAND E00ICIENCY
•Source& t$at o*erat!ona# au!tor canut!#!6e !n e"e#o*!ng &*ec!3ce"a#uat!on cr!ter!a7 –
H!&tor!ca# *erformance4 &!m*#e &et ofcr!ter!a !& ,a&e on actua# re&u#t& from*r!or *er!o& :or au!t&; to eterm!ne.$et$er t$!ng& $a"e ,ecome ?,etter or
.or&e@ !n com*ar!&on It !& ea&) toer!"e' $o.e"er' t$e) ma) not *ro"!emuc$ !n&!g$t !nto $o. .e## or *oor#) t$eau!te ent!t) !& rea##) o!ng
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CRITERIA 0OR EVALUATING E00ECTIVENESSAND E00ICIENCY
•
Source& t$at o*erat!ona# au!tor can ut!#!6e !ne"e#o*!ng &*ec!3c e"a#uat!on cr!ter!a7
– Com*ara,#e *erformance4*erformance ata ofcom*ara,#e ent!t!e& are t$e &ource of e"e#o*!ngcr!ter!a
– Eng!neere &tanar&4 cr!ter!a !& e"e#o*e ,a&e oneng!neere &tanar& T$e&e cr!ter!a are often t!mecon&um!ng' co&t#) to e"e#o* an re8u!re& e5*ert!&e'$o.e"er' ma) ,e "er) e%ect!"e !n &o#"!ng ma-or
o*erat!ona# *ro,#em& an .e## .ort$ t$e co&t – D!&cu&&!on an agreement&4 *art!e& !n"o#"e !n t$e&e
*roce&& !nc#ue& t$e management of t$e ent!t) to ,eau!te' t$e o*erat!ona# au!tor' an t$e ent!t) or*er&on& to .$om t$e 3n!ng& .!## ,e re*orte
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GENERAL APPROACH TO OPERATIONAL AUDIT
• THE OPERATIONAL AUDIT PROCESS
PLANNING
B EVIDENCE ACCUMULATION EVALUATION
REPORTING AND 0OLLO
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P#ann!ng P$a&e
a De3n!t!on of Au!t Pur*o&e4 t$e*ur*o&e !& to a**ra!&e t$e*erformance of a *art!cu#arorgan!6at!on' funct!on' or grou* of
act!"!t!e& T$e &co*e of au!t annature of re*ort mu&t a#&o ,e&*ec!3ca##) &tate T$e au!tor&
mu&t eterm!ne &*ec!3ca##) .$!c$*o#!c!e& an *roceure& to ,ea**ra!&e n $o. t$e) re#ate to t$e&*ec!3c o,-ect!"e& of t$eor an!6at!on
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P#ann!ng P$a&e
, 0am!#!ar!6at!on4 ac8u!&!t!on of com*re$en&!"e
+no.#ege of t$e o,-ect!"e&' organ!6at!ona#&tructure& an o*erat!ng c$aracter!&t!c& of t$eun!t ,e!ng au!te T$!& ,eg!n& .!t$ &tu) of orgc$art&' &tatement of funct!on& anre&*on&!,!#!t!e& a&&!gne' mgt *o#!c!e& an
!rect!"e& an o*erat!ng *o#!c!e& an *roceure& T$!& ,ac+groun !nformat!on e8u!*& t$e au!torto "!&!t t$e organ!6at!on1& fac!#!t!e& an !nter"!e.&u*er"!&or) *er&onne# to eterm!ne t$e!r &*ec!3c
o,-ect!"e&' t$e &tanar& u&e to mea&ureaccom*#!&$ment& of t$e&e o,-ect!"e&' an t$e*r!nc!*a# *ro,#em& encountere !n a"$!e"!ngt$e&e o,-ect!"e&
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P#ann!ng P$a&e
c Pre#!m!nar) t$e au!tor&1 *re#!m!nar)conc#u&!on& a,out t$e cr!t!ca# a&*ect& of t$eo*erat!on& an *otent!a# *ro,#em area& are&ummar!6e a& t$e au!tor&1 *re#!m!nar) &ur"e).$!c$ &er"e& a& gu!e for t$e e"e#o*ment of t$eau!t *rogram
De"e#o*ment of t$e Au!t Program4 !t !& ta!#or4mae for a *art!cu#ar engagement& It conta!n& a##t$e te&t an ana#)&e& t$e au!tor& ,e#!e"e arenece&&ar) to e"a#uate t$e organ!6at!on1&
o*erat!on& ,a&e on nature an !(cu#t) of t$eau!t .or+' a**ro*r!ate *er&onne# .!## ,e a&&!gneto t$e engagement' an t$e .or+ .!## ,e&c$eu#e
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B E"!ence Accumu#at!on an E"a#uat!on
• T$e au!tor mu&t gat$er e"!ence to *ro"!e a
,a&!& for ,e#!e"!ng t$at management1&a&&ert!on& are "a#! If management $a& not&tate an) a&&ert!on&' t$e au!tor mu&t a&&!&t !ne"e#o*!ng t$em
• T$e au!tor &$ou# ocument !n $er or $!&.or+!ng *a*er t$e au!t *#an' *roceure& ane"!ence o,ta!ne Au!tor& &$ou# &u*er"!&e&ta% to en&ure t$at t$e) e5erc!&e ue care !n
t$e *erformance of t$e au!t an mu&t o,ta!n&u(c!ent &u**ort for t$e 3n!ng& anrecommenat!on& to a##o. a eterm!nat!on.$et$er an) a&&ert!on !& fa!r#) "a#!
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REPORTING AND 0OLLO
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REPORTING AND 0OLLO
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REPORTING AND 0OLLO
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REPORTING AND 0OLLO
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2USINESS PROCESS IMPROVEMENT
AND RE4ENGINEERING
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2USINESS RE4ENGINEERING/ PROCESSRENOVATION
• Refer& to *erformance of a *roce&& !n ara!ca##) ne. .a) .!t$ t$e o,-ect!"e ofac$!e"!ng ramat!c !m*ro"ement !n
re&*on&e t!me' 8ua#!t) an e(c!enc)• A management too# t$at can $e#*
organ!6at!on to ac$!e"e an ma!nta!n acom*et!t!"e *o&!t!on !n t$e g#o,a#
econom) It $a& t$e *otent!a# to&!gn!3cant#) !m*ro"e t$e o*erat!on& ane%ect!"ene&& of t$e organ!6at!on
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2USINESS RE4ENGINEERING/ PROCESSRENOVATION•
In"o#"e& e"e#o*!ng ne. .a)& to *erform e5!&t!ngact!"!t!e& an .a)& to &to* non4"a#ue4a!ngact!"!t!e&
• An act!"!t) ana#)&!& .$!c$ !& t$e *roce&& of!ent!f)!ng' e&cr!,!ng an e"a#uat!ng t$eact!"!t!e& an organ!6at!on *erform&
• In act!"!t) ana#)&!&' em*$a&!& !& *#ace on!ent!f)!ng non4"a#ue ae act!"!t!e& ane#!m!nat!ng t$em
• Va#ue4ae act!"!t!e& are furt$er &crut!n!6e an&tu!e to !&co"er *o&&!,#e !m*ro"ement& !n*erform!ng t$em at t$e m!n!mum co&t&