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THE AUDIT PROCESS PART A - Coggle Diagram

- - - - b. Legal framework
        • Legal provision of creation
        • Statutes
        • Regulations
        • Labor Pact or Agreement
        • Laws, decrees and other external legal norms that have a direct impact on the development of the operations of the entity, body or company.
        
        c. Organization
        • Organization chart
        • Assignment of Responsibility
        • Delegation of authority or degree of autonomy
        • Function's manual
        • Internal Regulations or General Administrative Manual.
        
        d. Operations
        • Major operations or activities
        • Procedure manuals.
        
        and. Financing
        • Sources of Financing
        • Budget.
        
        f. Control
        • Internal Audit Manual
        • Specific control manuals.
        
        g. Additional Information
        Other information of an internal or external nature that is related to the nature of the operations or activities of the entity, body or company and that is considered important or useful for the Operational Audit.
    - - The general procedures that must be developed during this phase of the audit are listed below.
        • Interview with the head of the entity, body or company (Minister, Director or Manager) and other important officials, to obtain information on the 7 aspects.
        • Compilation of information on these aspects.
        • Familiarization visit to the offices and facilities of the entity, body or company, to: know their physical location, appreciate their size, and briefly meet the responsible officials.
        • Classification and referencing of the Information according to the 7 Groups indicated above.
        
        In summary, the preliminary study phase in operational auditing is similar to the financial audit and only differs in the diversity and quantity of the information to be collected, especially when it comes to the first audit, and, in that for its review and analysis there is a specific phase in the process.
- - - - At the end of this phase or stage of the operational audit process, the Auditor will have acquired a good degree of knowledge about the entity in which he is acting as an internal or external operational auditor, which will allow him to validly exchange opinions with the administration officials.
        
        One of the evidences that the Auditor has met the objectives of the phase is the graphic presentation of the primary mission, the main objectives and the most significant operations or activities, ranking their importance by assigning a number in consecutive order corresponding the No.1 to the highest hierarchy.
        This graphic presentation constitutes what is called the "Mission, Objectives and Operations Tree".
- - - - The reality regarding a specific entity is that it is necessary to identify which areas should be audited and among these select the one that will have priority in the evaluation.
        By principle of operational auditing, efforts should be directed towards the weak or critical areas and within these select the most significant or important ones to direct towards them, giving priority to the application of the operational audit.
      - b. Internal Operational Control
        The internal operational control for an entity or a certain area, implies a process whose elements are the following:
        • The Development of Objectives
        The first step is to determine what you want to achieve. The objectives of the Unit and the periodic goals to be achieved must be indicated, which must be within the framework of the objectives and general policies of the organization as a whole.
        • Measurement of Results
        Once the objectives and goals have been established, it is necessary to provide the measurement of current performance to determine if the unit is progressing towards the achievement of those objectives. This information must be available in a timely manner.
        
        • Comparison of Actual or Actual Performance with Proposed Objectives and Goals
        This comparison makes it possible to identify differences or deviations that can be used to determine weak points in the process.
        • Analysis of the Causes of the Different Deviations Determine why the significant deviations resulted.
        • Determination of Appropriate Management Action When analyzing the situation, it is necessary to determine what corrective action should be taken by management regarding deviations from objectives.
        • Taking Action Corrective action must be taken as quickly as possible to match actual operations with objectives.
        • Continuous Review After having carried out the corrective action, it is necessary to carry out a follow-up to ensure whether it has been effective and if other deviations have arisen.
        
        c. Selection of Weak or Critical Areas
        At the end of the internal control evaluation, the auditor, based on the results of this evaluation, will establish the weak or critical areas, which are those that present internal control weaknesses and will select within these those of greater relative importance and that have the necessary conditions. to guide operational audit efforts towards them.
        
        The scope of the detailed examination will be related to the resources available to carry out the examination and the availability of measurement criteria and information on the results obtained in the execution of the operations or activities to be examined, therefore it may also reduce its examination to the operations or most important activities of the critical area selected to carry out its evaluation in a reasonable time.
        
        In this matrix, the control deficiencies will be presented on the left, either because there are no controls, because they exist and do not work, or because they exist and are unnecessary.
        On the right, the objectives of Internal Control, the administration systems and the areas of the entity will be titled.
        An x will mark, in the corresponding boxes on the right, the impact of the control deficiency in such a way that in the last line the number of x that have affected each administration system and each area of the entity can be totalized. .
        The systems and areas with more x will be the systems and the weak or critical areas of the audited entity, among which the operational auditor will select the most important according to the criteria derived from the results of Phase II and within these, will choose the more conducive to detailed examination.