Operational Auditing--Fall 2010 5-2
Workpaper Usage
Planning and execution Supervision and review Objective tracking Conclusion support Supports quality assurance Professional development IIA standards’ compliance
Operational Auditing--Fall 2010 5-3
Workpaper Guidelines Cross-referencing system Consistent layouts Standardized symbols or “tick marks” Standardization for permanent files Unique indexing Description of purpose Initialed by preparer and reviewer Source of information indicated Clear explanations of symbols Legibly written and easy to understand Must stand alone Must relate to the engagement objectives
Operational Auditing--Fall 2010 5-4
Sample Work Paper
Heading Ref.
Review
T/M Legend:
Source
Purpose:
Conclusions
Operational Auditing--Fall 2010 5-5
Generalized Audit Software (GAS)
Two most popular applications ACL (ACL) IDEA (CaseWare)
Typical uses File examination Recalculations Sample selection File comparison Reformatting Pivot tables Benford’s Law analysis Reporting Data analysis log
Operational Auditing--Fall 2010 5-6
GAS, continued Benefits
Minimizes customization Independent of company IT Efficient Facilitates 100% testing Frees BPP for analytical work
Obstacles Data access Physical access Format knowledge Downloading issues to BPP’s computer Importing data in usable format
Operational Auditing--Fall 2010 5-7
Control Self Assessment (CSA)
Methodology Review and Identification
Key business objectives Related risks Mitigating controls
Operational Auditing--Fall 2010 5-8
CSA-History
Introduced by Gulf Canada in 1987 Gulf used facilitated meetings
Operational Auditing--Fall 2010 5-9
Facilitated Meetings
Management and staff participate through interviews and polling
Objectives Risks Processes Soft and/or informal controls
Operational Auditing--Fall 2010 5-10
General Methodology
Shared process Assessment of internal controls Evaluation of risks Development of action plans Assess the likelihood of achieving objectives SJSU simulation
Operational Auditing--Fall 2010 5-11
General Approaches
Facilitated meetings--group workshops Questionnaires--yes/no answers Management analysis--self studies
Operational Auditing--Fall 2010 5-12
Uses
Self analysis for risk* Selection of audit areas* Internal control review* Special projects Soft control analysis
* alternatives to the traditional approach to the I/A process
Operational Auditing--Fall 2010 5-13
Benefits
Increases I/A scope Target review of high risk areas Increases the effectiveness of corrective action Builds team-oriented relationships
Operational Auditing--Fall 2010 5-14
Engagement Process Planning:
Selecting the BPO Pre-site planning
Performing: Conducting the preliminary survey Review internal controls Expanding tests as necessary Generating findings
Communicating: Reporting the results Conducting follow-up Assessing the process
Operational Auditing--Fall 2010 5-15
Audit Evidence
Healthy skepticism Attributes
Relevant: consistent with objectives Reliable: credible Sufficient: convincing
Operational Auditing--Fall 2010 5-16
Business Processes
Basic entity for I/A services Understanding business processes is key
Operational Auditing--Fall 2010 5-17
Process Documentation
Flow charts
Storyboarding
Identifying business risks What gets in the way of objective achievement
Operational Auditing--Fall 2010 5-19
What Is Storyboard Flowcharting?
New method for documenting a process. Clean and simple flowcharting method. Allows for clients and auditors to clearly understand
process under review. Simple technique that requires a good graphics
package and a little imagination. Can use Microsoft PowerPoint, Harvard Graphics,
Corel Draw, etc. Does not replace IS flowcharting.
Operational Auditing--Fall 2010 5-20
The Basics of Storyboard
Meet with client and document process. Use your imagination to choose/draw picture. Under picture write narrative for each step represented. Be creative - good control narrative in green; poor controls in red. Completed storyboard must be reviewed with client. Make any changes necessary. Final copy should be in color for most effective presentation. Different process may require different approach.
Operational Auditing--Fall 2010 5-21
How to Storyboard
• Meet with client and document process.
• From client interview create storyboard.
A
A
• Print out story board - black and white draft and color for final.
• Review storyboard with client and obtain sign off.
Operational Auditing--Fall 2010 5-22
Start
Customer Service
Rep ReceivesOrder
Scan Form IntoSystem
Shipping FilesYellow
Customer ServiceRep ResearchesAnd CorrectsInformation
Shipping Pulls And
Packs Orders
End
By Phone?
By Mail or Fax?
On StandardOrder Form?
Shipping SendsOrder and Green
Copy (Invoice)
Customer Service Rep.Key Enters
Data on-Line
ApprovedBy Manager?
Send to SpecialOrder
Department
Print Three-Part
Shipper
Yellow and GreenTo ShippingDepartment
Pink to AccountsReceivable
Department
YES
YES YES
NO
NO
YES
Company XYZOrder-fulfillment process
NO
Operational Auditing--Fall 2010 5-23
A
A
Customer Representative
Receives orders by faxor mail.
Receives orders by phone.
Standard orders arescanned into system.
Customer Representativeenters order data on-line.
A three-part packing slip is printed per order.
Pink copy sent toaccounts receivabledepartment.
Company XYZOrder-fulfillment process
Packing slip approved by Manager.If not approved, returnedto Customer Representativefor correction
Packing slip
Yellow and green copy go to shipping department.Shipping pulls andpacks orders.
Yellow copy filed inshipping department.
Green copy sentwith order.
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