TORALDE, MA.KRISTINE E.

CBET-01-501E

1. List three reasons management may ask for an operational audit to be

performed, and explain how the audit program would be impacted by each of them.
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 36-38. Operational Audit involves a review of
the activities performed in a program or process in the pursuit of its objectives by
individuals, who are often supported by a variety of tools. Defining objectives of any
engagement is essential as an initial step to put it on the right footingfor success. The
three reasons management may ask for an operational audit are the objectives like:
New Rules that can be established internally or externally or a combination. New rules
can be the adaptation with many aspects of CSR.
Poor Performance which is the inefficiencies, waste, rework, or complaints from
customer that trigger management involvement these matter may be reviewed by the
internal audit.
Compliance Issues result of internal quality control initiatives that identify anomalies.
Internal audit department may investigate these kind of conditions at their organization,
help them to monitor situation, and verif that follow-through on corrective actions.

2. Explain the importance of identifying risk factors and using them during the
planning phase.
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 41. Risk factors plays important roles during
planning, and during risk assessments. Identifying risk factors and using it during
planning decreases the probability or the likelihood it will exist because you already
priorities the concern of that risk. Identifying potential problems should be done with
management and board of directors and that risk assessment will be the input about
plans, concerns and priorities.

3. Explain how an auditor would perform each of the following procedures:

a. Trace involves tracing a transaction from the source (e.g., a cash receipt, file
creation) to its destination, which could be a financial, operational, or regulatory report.
Tracing is done by looking at the unique document numbers and then moving to
account books to locate the source document. When the auditor knows about the
sequence to be followed, he can make the proper audit planning and program and
follow it.
b. Vouch involves the “reverse-trace” of a transaction from the destination to its
source. An auditor is looking for any errors in the amount recorded in the accounting
records, as well as ensuring that the correct accounts are recorded. the transactions are
recorded in the correct accounts. The auditor is also verifying that transactions have
been properly authorized.
c. Reconcile tie information from two separate sources to verify the accuracy or
expected discrepancies.
d. Foot add the items in a column. Footing is conducted by auditors to ensure that a
stated total accurately reflects the numbers in a column
e. Cross-foot add the items in a row. This is an essential tool of the auditor, to
ensure that reports summarize correctly and it verifies that the automated totaling
functions in a report are working as expected.

4. What is testimonial evidence and how is it gathered?

According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 45. Testimonal evidence consists of verbal or
written statements or assertions given by someone as proof regarding the matter being
discussed. Testimonial evidence is gathered during interviews so it can by verbal or
written if the auditor provide questionnaire. It is also assumed that auditees are making
truthful statements about their statements it doesn’t need to sworn.

5. Give two examples where observation is a useful technique to examine

operational risks and related controls.
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 46. One is the auditee know that the auditor is
observing, because like when you’re an employee you are forced to do what is taught
because the supervisor is observing you and you exert effort to do good when they are
observing. The second is the auditee does not know that the auditor is observing,
because what if the employee is only doing good because they know that they are being
observed? Management won’t know what really happened when they are not being
observed so I think it also reasonable to observed when employees have no idea about
it.

6. Give two examples where document inspection is a useful technique to examine

operational risks and related controls.
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 46-47. It is another way of collecting evidence
is by reviewing documents. Documents can be internal or external, financial or
nonfinancial. Examples are the invoice produces and invoices received to verify that it
will do to authorized person.

7. Explain professional skepticism and why it is important for all auditors.

According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page49-50. It is the tasked of internal auditors to
verify the integrity of the information gathered. International must be suspicious enough
if they have a doubt to the information they gathered. And it is important for all auditors
to verify information they gathered because according to Daniel Patrick Moynihan “You
are entitled to your opinion. But you are not entitled to your own facts”.

8. Provide three benefits of drawing process maps (flowcharts or value stream

maps, as some would rather call them).
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 51. Flowchart is a diagram of the sequence of
movements or actions of people or things involved in a process or activity. First benefit
of flowchart is they are easy to understand because it has a visual and it is simple, so in
the first so you can understand what are the flow of it. Second very helpful ro
understand where inefficiencies occur and how a process can be improved by reducing
excessive hand offs, delays, and redundancies. Lastly, it is easy to review.

9. What is an internal controls questionnaire and how can auditors use it during the
planning and fieldwork phases of audits?
According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page 53. Internal control questionnaire helps to
evaluate internal controls in specific areas by asking key questions. ICQs are used by
internal auditors as a starting point. And used by the process owners to help them
assess their operation. ICQs is useful when auditors needs to collect large amounts of
information. These information gathered by ICQs are used by internal auditors in the
planning and fieldwork phase.

10. Explain the acronym CCCER.

According to the book of Hernan Murdock Operational Auditing Principles and
Techniques for a Changing World, page58-59. The acronym CCCER is five attributes of
effective audit findings. Findings means are the documentation of deviations from what
was expected and form the basis for the audit report. It is the criteria, condition, cause,
effect and recommendation. CCCER items will make the auditor documents more
persuasive and the reader will be more likely to be convinced that the problem requires
correction.