Operational Auditing--Fall Accounting Business Skills “The What”  Business perspective  Organizational focus  Bias for action  Communication excellence  People proficiency

Operational Auditing--Fall Financial Management Guidelines “The How”  Cc  KTT  MBWA  R ƒ R 3

Operational Auditing--Fall Human Relations Issues  General people techniques  Due professional care  Hostile management approaches  Dealing with external auditors  Participative approach w/auditees

Operational Auditing--Fall General People Techniques  Promote the “wanna”  Foster feedback  Adopt a consultative approach  Use the “Will Rogers’ Approach”

Operational Auditing--Fall …Due Professional Care  Be fair but don’t whitewash  Avoid surprises  Go for the win-win  Have the guts to go to the top

Operational Auditing--Fall Hostile Management Approaches  Select the right time for discussion  Remain flexible in your conclusions  Avoid emotion; sometimes even logic won’t work  Don’t corner yourself or the other party  Listen to the other party  Help the other guy “to be right”

Operational Auditing--Fall Dealing with the External Auditors  Different objectives  Different accountability  Different qualifications  Different activities

Operational Auditing--Fall Cooperation  Economy  Efficiency  Effectiveness  Advantages for the external auditor Increases external auditor client insight Improves client relations Rotates emphasis  Advantages for the internal auditor Improves training Source of additional work Increases professional knowledge Independent appraisal source  Compliance with SAS 65 and SAS 99

Operational Auditing--Fall SAS 65  Defines roles  Defines function  Discusses competency & objectivity  Considers nature of the work  Discusses coordination  Guidelines for evaluation  Role of direct assistance

Operational Auditing--Fall SAS 99  Auditor’s responsibility to detect fraud

Operational Auditing--Fall Typical Int. Audit Assistance  Design of control systems  Reduction of risk assessment  Reduction of substantive testing

Operational Auditing--Fall Create a Cooperative Bridge  Coordination  Risk assessment alert  Control system disclosure  Common sampling tools  Pooled IT knowledge  Different perspective  Constant general communication

Operational Auditing--Fall Participative Approach  Joint goals  Consultation  Joint authority  Open discussion re: findings  Open review of reports

Operational Auditing--Fall COSO Control Objectives  Economy & efficiency of operations  Reliable financial and operational data and reports  Compliance with laws and regulations

Operational Auditing--Fall Control Objectives  Reliability and integrity of info  Compliance  Safeguarding of assets  Economical & efficient use of assets  Organizational attainment of goals & objs.

Operational Auditing--Fall Types of Control  Preventive  Detective  Corrective  Directive  Compensating

Operational Auditing--Fall Methods of Control  Organizational  Operational  Personnel  Review  Facilities

Operational Auditing--Fall Threats to Control  Management override  Open access to assets  Form over substance approach  Conflict of interest

Operational Auditing--Fall COSO Approach to Achievement  Sound control environment  Sound risk assessment process  Sound operational control activities Are the processes working  Sound info & communications system  Effective monitoring

Operational Auditing--Fall Control Environment  Culture of integrity, ethics and competence  Overall mgt. philosophy  Proper authority & responsibility  Proper organization of resources  Proper training and development  Senior mgt. attention & direction