1. Operational Auditing--Fall 2001 1 Audit Priority Factors 4 Last audit 4 $ exposure 4 Risk 4 Management requests 4 Operational changes 4 Opportunity for results 4 Changes in staffing

2. Operational Auditing--Fall 2001 2 Method of Selection 4 Set selection strategy 4 Identify potential auditees 4 Rank by risk 4 Choose entities

3. Operational Auditing--Fall 2001 3 Alt. Selection Strategies 4 Location 4 Financial exposure 4 Operational complexity 4 Staffing 4 Mgt. Interest 4 Functional type 4 Process type 4 Decision center

4. Operational Auditing--Fall 2001 4 Risk Factors 4 Quality of control system 4 Mgt. Competence 4 Mgt. Integrity 4 Size & liquidity of assets 4 System changes 4 Complexity 4 Personnel changes 4 Economic performance 4 Growth rate 4 Systems use

5. Operational Auditing--Fall 2001 5 Risk Factors, cont. 4 Time since last audit 4 Performance pressure 4 Government regulation 4 Employee morale 4 Politics & publicity 4 Geographic location 4 External audit plans

6. Operational Auditing--Fall 2001 6 Risk Analysis Methodology 4 Select top 5 risk factors 4 ID risk on scale of 1 to 5 4 Total the risk score 4 Rank in order of risk

7. Operational Auditing--Fall 2001 7 Project Prioritization & Selection 4 Rank by risk 4 Rank by hours 4 Compare to resources 4 Re-prioritize as necessary

8. Operational Auditing--Fall 2001 8 Selecting an Auditee “The 6 R’s” 4 Risk 4 Resources 4 Reward 4 Requests 4 Requirements 4 Revisions in operations or mgt.