1 Pertemuan 15 Audit Performance Matakuliah:A0274/Pengelolaan Fungsi Audit Sistem Informasi Tahun: 2005 Versi: 1/1

2 Learning Outcomes Pada akhir pertemuan ini, diharapkan mahasiswa akan mampu : Mahasiswa dapat menunjukkan audit performance.

3 Outline Materi Corporate Audit Performance Process Matrix –Assignment Log and Checklist Audit Performance Process Log –Description of Notice to Auditee –Preliminary Survey Purpose –Progression of and Procedures for Preliminary Survey –Planning Memo Purpose Objective Procedure Format –Audit Status Report

4 –Developing Audit Recommendations Recommendation Worksheet Form Format

5 Corporate Audit Performance Process Matrix The audit process begins with the notification of the auditee and concludes with the performance evaluation of each staff member on the project. The budget will help guide the staff to put their time into the proper areas. It will also assist audit management is explaining why audit have taken more or less time than originally panned. Budgets also help refine the long-term planning process and provide improved credibility for the audit function. One must always keep in mind that it is very difficult to measure audit productivity.

6 Assignment Log and Checklist At the commencement of an audit assignment, a number is given to the audit project.

7 Audit Performance Process Log In order to maintain control over all audit assignments, a log is kept by the department administrator.

8 Description of Notice to Auditee Some audit departments do not notify auditees because they can improve or address areas that may come under audit procedures.

9 Preliminary Survey Purpose Progression of and Procedures for Preliminary Survey

10 Purpose The purpose of a preliminary survey is to: –Gain a basic understanding of the entity to be audited, especially related to risk assessment –Begin the planning process

11 Auditors should obtain background information about the activities to be audited.

12 Progression of and Procedures for Preliminary Survey Review the scope of the pending audit. Arrange a preliminary meeting with management. Complete preliminary survey field procedures. Prepare a schedule of all significant books of original entry. Prepare a schedule of primary management reports.

13 Planning Memo Purpose Objective Procedure Format

14 Purpose The planning memo outlines the manner in which the department audit plan is to be implemented for a specific audit, special assignment or other activity. Before each assignment, a planning memo is required to establish coordination between internal audit staff and management. This document will ensure that the objectives and scheduling of the audit are being communicated and understood by all involved.

15 Objective The planning memo serves several purposes; namely, to document audit objectives, auditee background information and financial highlights; to describe significant audit procedures, budgeted hours, engagement timing and personnel assigned.

16 Procedure Planning memos are to be typed on interoffice stationery and addressed to the Director of Auditing. A copy is also included in the workpapers. The planning memo should be completed far enough in advance of an assignment for manager review and approval.

17 Format The format designed to be used consistently for a planning memo.

18 A brief explanation for each section follows: –Introduction –Objective –Scope –Background –Financial Highlights –Significant Audit Areas/Audit Approach –Staff and Timing –Budget

19 Audit Status Report The purpose of a status report is to provide audit management with a progress report of the assignment. On assignments scheduled for more than four weeks, a status report is required. A typical report would outline significant findings, audit scope changes and rationale, work completed and an estimate of time to complete the assignment. This information documents and enables the manager to make a decision on additional scope changes, staffing (increase or decrease) and staff schedule changes. The in-charge auditor has the responsibility for the status report.

20 A formal status report is not usually required for a short period assignment. However, an informal report can be phoned into the manager, describing significant findings, the status of the work completed, the estimate of completion and other situations affecting the audit. Communication keeps the manager aware of current situations and assists in the decision making on that assignment as well as scheduling other audits. It also provides documentation, as required in our corporate audit performance process, in our project control file.

21 Developing Audit Recommendations An audit recommendation is a condition that, in the auditor’s judgment, requires changes or action and is of sufficient magnitude to warrant the attention of management. Discovery of an exception is revealed during audit testing, development of recommendation may require a series of expanded audit tests, research and communication. The problem or situation as it exists must be fully defined and explained.

22 The ability to express the results of an audit in well-written audit recommendations is a measure of assurance that management will take appropriate action and one of the principal bases on which audit performance will be judged. Each auditor must assume individual responsibility for improving proficiency in this respect.

23 Some basic criteria for effective writing hat should be observed in the preparation of audit recommendations are: –Accuracy. –Objectivity. –Readability. –Clarity.

24 General Characteristics: –Evaluate the significance of what you are reporting. –Write in simple, non-technical, clear language. –If you refer to a form number, state its name or subject somewhere in the report. –If you use obbreviations, spell out heir meaning when they first appear. –Reasonable logic is important. –Be concise. Avoid wordiness and inclusion of extraneous matter. –Do not be evasive. –Write constructively.

25 –Provide support to all information in recommendations. –Present relevant comments and reviews of the issues being discussed. –Clearly identify opinions, especially if they concern significant matters. –Do not generalize by simply saying that a practice “weakens controls.”

26 The following steps should be followed in order to provide for systematic development of a recommendation after an exception is revealed: –The problem or situation as it exists must be fully defined and explained. –The criteria or standards for an activity should be re- evaluated as to applicability and adequacy at this point in the development of the recommendation. –It is necessary to look at the effect and significance of the problem. –If the effect is minimal, this condition is the auditor’s notice to discuss the problem with the operating level of management.

27 –If, in the auditor’s opinion, the effect is significant, the auditor should proceed with the development of the recommendation. –The auditor must seek to find out, through expanded testing and gathering of data, what caused the problem or situation.

28 Developing Recommendation Data: –Statement of Condition. –Criteria –Effect. –Cause. –Statement of Action.

29 Recommendation Worksheet A form should be created for the purpose of writing up the recommendations as they are initially discovered. A copy should then be given to the auditee.

30 There are many good reasons for following this procedure: –If recommendations are neat and well written at the time of discovery and copies given to the auditee, valuable research and input can be obtained before the closing conference. –The procedure lends itself to better written,more factual audit recommendations because the material is fresh on the auditor’s mind – preferable to writing the recommendation later in time. –Why take many recommendations to the closing conference when a “climate for change” can be initiated during the course of the audit?

31 –If the recommendation has been resolved by the auditee during the audit, it is much more agreeable to the auditee. If only mention is made summarizing items corrected during the audit. –The interim communication also gives the auditor a written workpaper document to use in discussing recommendations at the closing conference. –Once written recommendations are resolved to the degree possible, corrections should be made and submitted for typing the final report.

32 Form Format The form is designed to be as functional as possible but it is limited in space to encourage factual, precise write-up recommendations.

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34 The End