An operational audit involves six steps, including preparatory work, conducting interviews and collecting documents, and submitting a final written report. The audit is customized to meet the specific needs of a company and aims to determine whether resources are being used efficiently and identify ways to improve systems. The final step involves producing a detailed report with conclusions and recommendations.
There are typically six steps in an operational audit ranging from preparatory work to conduct interviews and collect documents to submitting the final written report. An audit must be customized to meet the specific needs of a company, so the standard steps can only serve as a guide. Management and its internal and external auditors will adjust the process to address the company’s unique goals and objectives.
An operational audit is a review of a company’s internal processes. Its goals are to determine whether company resources are being used efficiently and to identify ways to improve systems. The review includes various tasks, such as financial controls, equipment condition, and human resource assignments. Larger companies often have an internal audit department that will handle operational auditing. Some companies will hire outside consultants who specialize in operational reviews to perform the audit or work in conjunction with internal staff.
The first step in an operational audit is to structure the next review. This could involve a meeting to outline expectations and answer questions about the process. An external auditor will use this step to gather pertinent information about the company and establish goals and objectives for the audit. This introductory step establishes the scope of the review.
Steps two and three of the audit are the management and employee surveys. Managers are often interviewed to get details about the company’s systems and procedures. Employees are interviewed and observed in their work environments. Observation can lead to important insights into operational deficiencies that would not be apparent through an interview.
The presentation of the audit plan is typically the fourth step in an operational audit. An audit plan is a written agenda detailing the steps the company will need to take to complete the audit. It is customized and based on the information the auditor collected in the previous steps.
Step five is the actual audit. The auditor implements the audit plan, which typically includes a review of the company’s productivity and sales efforts. On the financial side, it assesses billing, cash flow management, and reporting processes. The company’s risk management procedures are also typically included in the audit. An operational audit may include these areas and any others that management deems need third-party evaluation.
In the sixth step, the auditor produces a final written report. He details his conclusions and recommendations. This report can be hundreds of pages long, depending on the size of the company and the number of operational areas that were included in the audit.
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