1. Operational Auditing Spring 2005 Professor Bill O’ Brien

2. Operational Auditing--Spring 20052 Roles of Internal Auditing 4 Auditing or assurance 4 System design & implementation 4 Performance appraisals 4 Consultations 4 Strategic planning 4 Merger & acquisition analysis 4 Market appraisals 4 Investment analysis

3. Operational Auditing--Spring 20053 Control Objectives 4 Safeguarding of assets 4 Compliance 4 Organizational goal & obj. achievement 4 Reliability and integrity of info 4 Economical & efficient use of assets

4. Operational Auditing--Spring 20054 Risk Categories: Evidence of Risk 4 Inadequate information 4 Failure to follow policies etc. 4 Loss of assets 4 Poor use of resources 4 Failure to achieve goals & objs.

5. Operational Auditing--Spring 20055 Organizational Relationship 4 Reporting responsibility –As high as possible…the Audit Committee 4 Administrative responsibility –To a key interested party

6. Operational Auditing--Spring 20056 Audit Committee History 4 NYSE: Suggests in 1940 4 AICPA: Recommends in 1967 4 FCPA: Strong imperative in 1977 4 Treadway: Recommends requirement in 1987

7. Operational Auditing--Spring 20057 Effective Audit Committees 4 Independence 4 Skills balance 4 Time availability 4 Tough-mindedness 4 Clear charter 4 Specific duties 4 Maintain documentation

8. Operational Auditing--Spring 20058 Role of Audit Committes 4 Financial reporting 4 Corporate governance 4 Corporate control 4 Treadway Comm. Compliance –Requires direct communication Audit plans EDP concerns Special areas of risk

9. Operational Auditing--Spring 20059 Interaction with Auditors 4 Evaluate I/A staff 4 Review audit philosophy 4 Review control systems 4 Review plan and financial impact 4 Multi-year coverage comparison 4 Provide special requests 4 Assure free access for I/A 4 Support I/A independence 4 Oversight for logistics and status

10. Operational Auditing--Spring 200510 Ops. Audit as a Profession 4 Professional attributes –Exam –Standards –Statement of responsibilities 4 Inst. of Internal Auditors –Professional leadership –Technical resources and training 4 Code of ethics

11. Operational Auditing--Spring 200511 Establishing an I/A Function 4 Reporting structure 4 Mission statement/ role of dept. 4 Objectives 4 Department tone--teamwork 4 IIA standards 4 Commitment to continuing education