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25 Cards in this Set
- Front
- Back
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Board of directors auditing committee
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Appointing the external auditors
Appointing the internal auditors Approving the internal auditing goals, policies and plans Directing the internal auditing function Assigning special projects to the internal auditing department Subcontracting special auditing activities to external consultants Terminating the services of internal and external auditors and consultants Evaluating the performance of the internal auditing department Reporting to the Board of Directors Assuming full responsibility for the internal auditing function |
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Responsibility for the internal auditing evaluation
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Internal review by the board of directors auditing committee
Independent review by other organizational components Peers review by other internal auditing departments External review by independent auditors External review by independent consultants |
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Internal auditing evaluation techniques
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Basic system of financial control
Broader operational areas Line activities Special projects Negative guides Positive guides General guides Internal auditing operational costs |
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Future prospects for the internal auditing profession
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Expansion of financial operational and managerial
Increase in earning capabilities The need to keep up to date Necessity of combining the right blend of fin. Man. And Oper. Auditing Online audits Fast detection and diffusion Development of firms to cope with requirements of reporting on many relationships Adjusting to the new computer world Significant improvement in the training qualifications of internal auditors Increasing reliance on the utilization of the professional services of the institute of internal auditors |
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Management Auditing – Define
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Science, art, and profession of examining a wide range of managerial issues concerning an enterprise and reporting on its relevant findings and recommendations to concerned parties.
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Management Auditing – Functional Areas (Exam)
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Economic Function
Investments Efficiency Competitiveness Situation Services to the stockholders R&D Efficiency Production Efficiency Sales Vigor (speed at which products are delivered) Organization structure Directorate Analysis Executive evaluation |
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Economic Function (how does the company benefit the local area)
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Worthwhileness of corporation
Sales size Profitability Employees & Compensation Taxes Dividends Interest paid |
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Investments Efficiency
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Rate of return
Risks of investments Business combinations |
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Competitiveness situation (how does company compete)
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Lower cost
Higher quality Market share Patents, copyrights, trademarks M&A |
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Services to the stockholders
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Fraud
Mismanagement |
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Major problems with management auditing practice
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Inadequacy of auditing funds & resources
Lack of professional training Complexity of auditing work Impact of human factors Interpretation of findings Conflict of interests Impact of multiple-level reporting |
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Major contents of the management auditing reports
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Encyclopedic coverage
Description of audit works (history) Audit findings Causes for audit findings Auditors comments Auditees’ comments Audit recommendations |
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Organization structure – Concept
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Process of evaluating the efficiency of the general organization structure.
-Determine the company org structure -examine the components for relevancy -Compare the general organization structure to competitors evaluate the efficiency of the general organization structure |
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Corporate Organization Structure
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Organization Functions
Operations Volume Budget Requirements Management goals Vacant positions Managers qualifications Availability of managers Expansion plans Contracted obligations Performance efficiency |
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Directorate Analysis
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Combination of financial analysis and cost analysis.
A management auditing function that involves the correlation all types of information provided by the enterprise and its competitors in order to achieve management auditing goals. |
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Classification of major types of Directorate Analysis (Exam)
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FUNCTIONAL PERIOD
Horizontal Analysis Vertical Analysis SCOPE OF ACTIVITIES Internal Analysis External Analysis FUNCTIONAL GOALS Break-even Point Analysis Overall Operating Efficiency Analysis Productivity Analysis Assets Operating Efficiency Analysis Profitability Analysis Financial Strength Analysis |
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Horizontal Analysis
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Several accounting periods
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Vertical Analysis
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One accounting period
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Internal Analysis
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One enterprise
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External Analysis
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Several enterprises
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Overall Operating Efficiency Analysis
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Measures senior and middle management operating efficiency
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Productivity Analysis
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Measures the efficiency of:
-Senior management -Human Resources -Financial resources -Technical resources |
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Assets Operating Efficiency Analysis
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Measures:
-the rate of return on assets investments -senior and middle management efficiency in managing assets. |
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Profitability Analysis
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Measures the rate of return on the stockholders equity
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Financial Strength Analysis
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Measures:
-Equity in assets -Ability of a company to payback its creditors and stockholders in case of liquidation. -Ability of future expansion |
