Operational Audit

Operational auditing is the process carried out by an auditor using a methodology in accordance with standards. During the process, a series of analyzes are carried out where the operational activities of the functions in a specific company or organization are evaluated. The methods used in the process are similar to those used in other types of audits, such as financial and specific audits; However, in the process of an operational audit, deeper analyzes are applied to the functions of the company or organization.

Generally, operational auditing is applied to more than one department or project, and this is because each of these elements are integrated with each other to guarantee the overall and efficient functioning of a company.

Objective:

The main objective of the operational audit process is to determine whether the internal controls of the company or organization, as well as the methods and procedures, are adequate and manage to produce optimal levels of efficiency. The prior knowledge that the controls, methods and procedures applied in a given company are optimal is fundamental and prevailing, since the degree of optimal efficiency translates into a greater volume of income whose operational costs should not exceed those necessary. .

Operational audit process:

The auditor meets previously with managers, explains the audit process and is informed about the concerns of the functions and operations that are generating negative consequences and risks. Subsequently, the auditor meets with the managers of the areas to be examined and verifies the components of the audit and the associated concerns.

The auditor then conducts a series of interviews with those who control the risk areas to determine and document the control objectives and activities. The auditor meets with the managers responsible for each area analyzed and discusses the controls that have irregularities.

Fourth, the auditor designs and prepares testing procedures for each key control. Reviews the planning resolution with the directors, performs the tests, documents them and analyzes all the results and improvement proposals.

Fifth, prepare an audit report, meeting with management to discuss it and address any problems found until you are certain that the company's or organization's internal controls, as well as methods and procedures, are adequate and achieve produce optimal levels of efficiency. The final step is the creation of a final report, the preparation of procedure manuals if required, and follow-up through periodic supervision.

As part of the process, there is the planning of the steps to follow in relation to the area whose functions are going to be audited, for example, in a process audit in the administrative accounting area, a plan would be the following:

The planning is as follows:

The work will be carried out according to the following steps:

1. Identify jobs that are involved in administrative and accounting activities;

2. Compile information on the procedures that currently apply to perform the identified jobs;

3. Prepare the most appropriate profile of the worker to perform each position, verifying necessary elements such as:

Academic studies
Basic knowledge of work equipment
Languages you should master
Age range
Sex without falling into discrimination
Technical knowledge and experience
Desirable positive attitudes
Desirable family nucleus
Physical location of the desirable home
Others

4. Compare the necessary profiles with the real ones of the people who currently perform the job and identify gaps or overqualifications;

5. Prepare the most appropriate descriptions and work procedures for each position, taking into account elements such as:

Work forms with their corresponding descriptions of their use
Levels of internal accounting control
Process flow chart
Reports and reports on activities and their frequency such as:
- Billing
- Collection and maturity of debtor balances
- Suppliers and maturity of credit balances
- Checks issued
- Bank balances
- Cash flow
- Budgets

6. Analyze work tools and the level of knowledge in their use and application, tools such as:

Accounting Recording Software
Payroll preparation software

The operational audit has the following advantages:

1. The operational audit process provides the company with objective criteria;

2. These criteria generally allow sales to be produced more quickly, and also allow for better allocation of costs;

3. Activity control systems improve;

4. They allow detecting and locating areas of delay;

5. They allow you to improve and optimize the flow of activities; and

6. They save the company a lot of money in the medium and long term.

However, it has the following disadvantages:

1. Operational audits are expensive;

2. Operational audits generally take considerable time to complete;

3. It can be difficult to determine exactly what is causing problems as operations become more complex;

4. Although review operations based on the results of these audits can save the business money in the medium and long term, their implementation can confuse those involved in the initial process;

5. May require additional training or significant personnel changes ranging from new hires to unexpected dismissals.