Activities Comprising the Detailed Examination of Critical or Weak Areas
To achieve the objective of this phase, the operational auditor must develop the following activities:
• Careful review of the information collected in the previous phases that is related to the selected critical area.
• Compilation of additional information through interviews, physical inspections, direct observation of operations, consultation of specialized literature, etc.
• Determination of the precision, reliability and usefulness of the information in the area for use by the management or direction of the entity.
• Classification of the possible measurement criteria that may be used (Laws, decrees, resolutions, regulations, policies, objectives and goals established in the programmatic budget or in the PAO Annual Operations Program, performance standards, performance indicators).
• Determination of the need to obtain technical advice from a specialist who is not involved in the operations examined.
• Selection of the operation or operations that are considered the most important or significant and within these the most viable, to be examined in depth.
• Identification and development of the characteristics of the possible operational audit findings (HAO), to establish whether the selected operations of the examined area are achieving the established objectives and goals, within the general objectives of the area or unit and of the entity and to establish economy and efficiency in the use of human, material and financial resources involved in critical areas.
• Formulation of conclusions and identification of recommendations to improve the effectiveness or efficiency, economy and efficiency of the operations involved in the operational audit findings.
The previous points will be the basis for preparing the general Program of the Phase, which will contemplate as the last procedure the discussion of the results of the HAO with the responsible officials, to reach an agreement on them.
Audit Programs for Examination of Critical Areas
The above activities can be reflected in a program of general operational audit procedures to develop Phase IV, but it will be necessary to develop detailed and tailored work programs, which contain the steps to follow in the development of said procedures, depending on the type and the nature of the area, unit or operations to be evaluated.
The work programs must have a logical structure that leads to achieving the objectives of establishing and improving the achievement of the proposed goals (effectiveness) or reducing the cost of operations (economy) or determining and improving the level of efficiency.
As already indicated in the section dedicated to methodology, in operational auditing the programs must be flexible enough to allow the auditor to develop professional initiative in the face of unforeseen circumstances that may arise in the development of the evaluation.
Characteristics of the Operational Audit Finding
Operations or activities that are affected in effectiveness, economy or efficiency, constitute the so-called operational audit findings.
The characteristics of the operational audit finding are four, namely:
• The Condition This characteristic is given by the current situation found by the auditor (What it is).
• The Criterion The criterion is given by the measurement units, the applicable legal provisions or standards, the indicators or indices and in general by the parameters that the auditor uses to compare or measure the current situation. It can be said that "the criterion" is "what should be," that is, the ideal situation.
• The Effect It is the adverse result of comparing the condition against the criteria. There are effects that can be rescued in the future, but there are also irresistible effects.
• The Cause It is the reason or reason for the evaluations or effects established when comparing the condition against the criteria; it is the reason for the effect or the condition.
Conclusions and Recommendations on HAO
Once the operational auditor has developed the characteristics of a finding, he will be in a position to conclude on it and proceed to identify the best solution, to finally formulate the recommendation or recommendations, the purpose of his work.
• The Conclusion is the synthesis written with objectivity and impact, of the characteristics of the finding (condition, criteria, effect and cause). Said synthesis should not exceed two sentences presenting the seriousness of the problem.
• Recommendations are the suggestions presented by the Auditor to correct or improve the effectiveness, economy and efficiency of the operations involved in the finding.
The recommendations will be aimed at preventing the cause of the finding from being repeated in the future and at rescuing the effects when they are recoverable. Likewise, the operational audit recommendations must be practicable, useful and affordable.
Working Papers in Operational Audit
The working papers in operational auditing are the set of certificates and documents that the auditor uses to record or evidence of:
• Information obtained during the examination.
• Evaluation of the effectiveness of internal financial and operational accounting control, and of the identification and selection of critical areas.
• The evaluation or development of the findings.
Cedulas
They are the working papers prepared directly by the auditor and are divided into summary and analytical. The summary schedules summarize everything concerning the HAO (condition, criteria, effect, cause, conclusion and recommendation). The analytical schedules support, substantiate or demonstrate the HAOs.
Documents
They are the working papers prepared or supplied by people other than the Auditor (the entity, third parties, etc.), which serve to support or demonstrate the Auditor's assertions.
Index
It is the codification of the areas and of the different findings, it serves to reference, cross and properly file the working papers.
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Usefulness of Work Papers
In operational auditing, work papers are used to:
• Support and competently demonstrate operational audit findings, conclusions, and recommendations to improve effectiveness or efficiency, economy, and efficiency.
• Provide sufficient information for the preparation of the Operational Audit Report
• Demonstrate the solidity and professional quality of the Audit work.
• Allow the supervision of the Audit work.
• Guide the conduct of subsequent Operational Audits.
Rules for preparing the Working Papers
• It must have a heading that indicates the area under examination or evaluation, the date of the evaluation and the title of its content.
• They must be written with clarity, objectivity and adequate grammar.
• Must be cleanly and mathematically accurate
• Must include evidence supporting the Auditor's claims.
• They must contain the information that demonstrates the performance of the tests and procedures performed.
• They must be completely finished, referenced and crossed in such a way that their revision does not require the presence of the person who prepared them.
Archive of the Working Papers
• Current file is composed of the working papers of exclusive interest for a given Audit and therefore they are not of continuous use in subsequent audits, such as the analyzes that support the tests carried out, the correspondence related to the examination, the audit programs. , etc.
• Permanent Archive is made up of the work papers for continuous use or necessary in subsequent audits such as: legal provisions, policies, procedures, organization of the entity, evaluation of internal control, etc.
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