1. Operational Auditing---Spring 2000 (2/3) 1 Accounting Business Skills “The What” 4 Business perspective 4 Organizational focus 4 Bias for action 4 Communication excellence 4 People proficiency

2. Operational Auditing---Spring 2000 (2/3) 2 Financial Management Guidelines “The How” 4 Cc 4 KTT 4 MBWA 4 R ƒ R 3

3. Operational Auditing---Spring 2000 (2/3) 3 Human Relations Issues 4 General people techniques 4 Due professional care 4 Hostile management approaches 4 Dealing with external auditors 4 Participative approach w/auditees

4. Operational Auditing---Spring 2000 (2/3) 4 General People Techniques 4 Promote the “wanna” 4 Foster feedback 4 Adopt a consultative approach 4 Use the “Will Rogers’ Approach”

5. Operational Auditing---Spring 2000 (2/3) 5 …Due Professional Care 4 Be fair but don’t whitewash 4 Avoid surprises 4 Go for the win-win 4 Have the guts to go to the top

6. Operational Auditing---Spring 2000 (2/3) 6 Hostile Management Approaches 4 Select the right time for discussion 4 Remain flexible in your conclusions 4 Avoid emotion; sometimes even logic won’t work 4 Don’t corner yourself or the other party 4 Listen to the other party 4 Help the other guy “to be right”

7. Operational Auditing---Spring 2000 (2/3) 7 Dealing with the External Auditors 4 Different objectives 4 Different accountability 4 Different qualifications 4 Different activities

8. Operational Auditing---Spring 2000 (2/3) 8 Cooperation 4 Economy 4 Efficiency 4 Effectiveness 4 Advantages for the external auditor –Increases external auditor client insight –Improves client relations –Rotates emphasis 4 Advantages for the internal auditor –Improves training –Source of additional work –Increases professional knowledge –Independent appraisal source 4 Compliance with SAS 65

9. Operational Auditing---Spring 2000 (2/3) 9 SAS 65 4 Defines roles 4 Defines function 4 Discusses competency & objectivity 4 Considers nature of the work 4 Discusses coordination 4 Guidelines for evaluation 4 Role of direct assistance

10. Operational Auditing---Spring 2000 (2/3) 10 Typical Int. Audit Assistance 4 Design of control systems 4 Reduction of risk assessment 4 Reduction of substantive testing

11. Operational Auditing---Spring 2000 (2/3) 11 Create a Cooperative Bridge 4 Coordination 4 Risk assessment alert 4 Control system disclosure 4 Common sampling tools 4 Pooled IT knowledge 4 Different perspective 4 Constant general communication

12. Operational Auditing---Spring 2000 (2/3) 12 Participative Approach 4 Joint goals 4 Consultation 4 Joint authority 4 Open discussion re: findings 4 Open review of reports

13. Operational Auditing---Spring 2000 (2/3) 13 COSO Control Objectives 4 Economy & efficiency of operations 4 Reliable financial and operational data and reports 4 Compliance with laws and regulations

14. Operational Auditing---Spring 2000 (2/3) 14 Control Objectives 4 Reliability and integrity of info 4 Compliance 4 Safeguarding of assets 4 Economical & efficient use of assets 4 Accomplishment of goals & objs.

15. Operational Auditing---Spring 2000 (2/3) 15 Types of Control 4 Preventive 4 Detective 4 Corrective 4 Directive 4 Compensating

16. Operational Auditing---Spring 2000 (2/3) 16 Methods of Control 4 Organizational 4 Operational 4 Personnel 4 Review 4 Facilities

17. Operational Auditing---Spring 2000 (2/3) 17 Threats to Control 4 Management override 4 Open access to assets 4 Form over substance approach 4 Conflict of interest

18. Operational Auditing---Spring 2000 (2/3) 18 COSO Approach to Achievement 4 Sound control environment 4 Sound risk assessment process 4 Sound operational control activities –Are the processes working 4 Sound info & communications system 4 Effective monitoring

19. Operational Auditing---Spring 2000 (2/3) 19 Control Environment 4 Culture of integrity, ethics and competence 4 Overall mgt. philosophy 4 Proper authority & responsibility 4 Proper organization of resources 4 Proper training and development 4 Senior mgt. attention & direction

20. Operational Auditing---Spring 2000 (2/3) 20 Flowcharting Begin or End File Decide Document Activity