1. Operational Auditing--Fall 20061 Accounting Business Skills “The What”  Business perspective  Organizational focus  Bias for action  Communication excellence  People proficiency

2. Operational Auditing--Fall 20062 Financial Management Guidelines “The How”  Cc  KTT  MBWA  R ƒ R 3

3. Operational Auditing--Fall 20063 Human Relations Issues  General people techniques  Due professional care  Hostile management approaches  Dealing with external auditors  Participative approach w/auditees

4. Operational Auditing--Fall 20064 General People Techniques  Promote the “wanna”  Foster feedback  Adopt a consultative approach  Use the “Will Rogers’ Approach”

5. Operational Auditing--Fall 20065 …Due Professional Care  Be fair but don’t whitewash  Avoid surprises  Go for the win-win  Have the guts to go to the top

6. Operational Auditing--Fall 20066 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”

7. Operational Auditing--Fall 20067 Dealing with the External Auditors  Different objectives  Different accountability  Different qualifications  Different activities

8. Operational Auditing--Fall 20068 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

9. Operational Auditing--Fall 20069 SAS 65  Defines roles  Defines function  Discusses competency & objectivity  Considers nature of the work  Discusses coordination  Guidelines for evaluation  Role of direct assistance

10. Operational Auditing--Fall 200610 SAS 99  Auditor’s responsibility to detect fraud

11. Operational Auditing--Fall 200611 Typical Int. Audit Assistance  Design of control systems  Reduction of risk assessment  Reduction of substantive testing

12. Operational Auditing--Fall 200612 Create a Cooperative Bridge  Coordination  Risk assessment alert  Control system disclosure  Common sampling tools  Pooled IT knowledge  Different perspective  Constant general communication

13. Operational Auditing--Fall 200613 Participative Approach  Joint goals  Consultation  Joint authority  Open discussion re: findings  Open review of reports

14. Operational Auditing--Fall 200614 COSO Control Objectives  Economy & efficiency of operations  Reliable financial and operational data and reports  Compliance with laws and regulations

15. Operational Auditing--Fall 200615 Control Objectives  Reliability and integrity of info  Compliance  Safeguarding of assets  Economical & efficient use of assets  Organizational attainment of goals & objs.

16. Operational Auditing--Fall 200616 Types of Control  Preventive  Detective  Corrective  Directive  Compensating

17. Operational Auditing--Fall 200617 Methods of Control  Organizational  Operational  Personnel  Review  Facilities

18. Operational Auditing--Fall 200618 Threats to Control  Management override  Open access to assets  Form over substance approach  Conflict of interest

19. Operational Auditing--Fall 200619 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

20. Operational Auditing--Fall 200620 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