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GENESIS OF OPERATIONAL AUDIT - Coggle Diagram

- - - - An appropriate definition of an operational audit will comprise an independent assessment of all operations of a company:
        For example: An independent assessment of the various operations and controls within an organization to determine whether acceptable policies and procedures are in place, established standards are followed, resources are used efficiently and economically, and whether the objectives of the organization have been reached.
      - The term “operations2 as a designation of non-financial activities and functions appeared in the Declaration of Responsibilities of the Internal Auditors, published by the IIA. The 1947 statement said that internal auditing "dealt primarily with accounting and financial matters, but that it would also be appropriate for it to deal with matters of an operational nature."
        
        The 1957 Declaration guided this concept toward a broader audit by stating:
        "Internal audit is an independent assessment activity within an organization, for the review of accounting and financial activities, as well as other operations."
        The 1971 version adopted the final concept when it mentioned that the internal auditor is simply responsible for "the review of operations as a service to management."
- - - - The operational audit logically evolves towards the auditor by the initial delegation of responsibility for the protection of the interests of the company.
        This is close to the application of analysis and evaluation techniques of non-financial activities by internal auditors.
      - Operational auditing is defined by these rules:
        • Auditors should do their jobs personally as a manager would if the time was available.
        • Auditors should assume that they are the owners of the business, that they own the profits, and before recommending a change or criticizing an operation, they should ask themselves what they would do if the business were really theirs.
        
        The operational audit is, therefore, a way through which internal auditors approach their work, analyze the matters within their competence and consider the results. To do this they must adopt the techniques and approaches from the perspective of a director.