Auditing Archive

Tony Jacowski asked:




This means that a lot of priority is given to the implementation of the Six Sigma methodology. All the objectives that have been defined by Six Sigma are influenced a lot by various efforts, especially the way the policies are formulated and how the company’s organizational structure is managed.

One of the major problems in adopting Six Sigma is that it could take as long as three to four months for the company to see the desired effects. Therefore, in order to keep an account of the changes of the implementation process, Six Sigma auditing is essential.

The Six Sigma Outlook

Proper Six Sigma auditing helps in ensuring that everything works according to the plans framed by the Six Sigma methodology. One of the best things about a Six Sigma audit is that the audit checks done by the experts give high priority to the quality of the processes. The auditing process is very simple as well. It involves a set of survey questions that helps the auditor determine the actual condition of a particular business process.

Once the auditors have determined the situation of all the business processes, they simply compare them with the estimated or the desired results. The estimations are made right from the beginning of the operational phase of the Six Sigma implementation. The audit process is so systematic that it seems quite similar to the audit processes adopted by the ISO 9000 certified organizations.

Many companies have actually profited by using the Six Sigma auditing strategy prescribed by the ISO certified organizations.

Details of Six Sigma Audits

In the process of Six Sigma auditing, many professionals use charts and statistics in order to make sure each and every aspect of the Six Sigma implementation has been looked at. These charts are usually prepared at the beginning of the project and serve as a checklist so that the auditors are assured that every aspect has been adhered to.

Each checklist is prepared specifically for a particular business process, which eliminates any chance of errors at the source. For example, when conducting an audit of the available inventory, the auditors will specifically prepare an inventory checklist for that purpose. The checklist procedure is based on the Standard Operating Procedure (SOP), which is defined at the beginning of the implementation stage.

The checklists are in the format of a questionnaire, which helps the auditor to ascertain whether or not that particular company process is being adhered to or not. The Six Sigma audit also helps the organization to identify the problem in any of the processes and correct them before any damage is done. For instance, if a fault is found in the sales system, or if the sales are less than what was estimated in the beginning, the data collected in the entries by the auditors help them determine where exactly had the fault taken place thereby finding the main cause of the deviation in the figures.

Even though the Six Sigma methodology aims at eliminating the defects bringing about quality control in the business processes, the Six Sigma audit process aims only at the present business goals and its achievement.

Kansieo.com

Michael Kuman asked:




Auditing is a systematic process of obtaining and examining the transparency and truth of financial records of a business entity or the government. This accounting tool determines whether the financial statements of a particular company is accurate and without a trace of deceit.

Redcliffe offers a variety of companies that provide auditing work for different institutions. The three types of auditors are internal, governmental, and external. Internal auditors are employees of the company whose financial statements are being examined. The purpose of internal auditing is to check the company’s policies, procedures, and records, and evaluate the company’s plans and attainment of goals. External auditors, on the other hand, are not employees of the company being audited. They evaluate the honesty of a company’s financial statements and issue a written report that contains the opinion that they have formed regarding the company’s financial statements.

At Redcliffe, auditing is done in a systematic manner following four steps: planning, gathering evidence, evaluating the evidence, and issuing a report. Auditors are required to go through detailed education and training that prepare them for the pressure and stress of handling complicated auditing tasks.

Certified accountants at Redcliffe employ a systematic and carefully planned manner of auditing in order to accurately gauge a company’s financial status. The work they perform provides useful information to potential stockholders, managers, and even external players such as lenders because auditing allows the internal and external clients to accurately assess a company’s financial stability, thus, making way for investments to push through and aiding in the management’s decision-making.

A company needs auditing in order to ensure that the path the organization is taking gears toward the goals that have been set and does not stray from the regulations set by the government and the company itself. Thus, it is important to have unbiased, independent auditors to check on the consistency of these goals.

Caffeinated Content – Members-Only Content for WordPress

Wale Wahab asked:




Generalized Audit Software (GAS) is one of the families of Software that is frequently utilized in Computer-Assisted Auditing. It is an off-the-shelf package that can provide a means to gain access to and interrogate data maintained on computer storage media. It is one of the tools IT Auditors utilize to obtain evidence directly on the quality of the records produced and maintained by application systems. There are many GAS packages available in today’s market. However, their quality and diversity do vary. It is recommended that you investigate several packages and talk with other users before purchasing one.

GAS consists of a series of computer program routines that can read computer files, select desired information, perform repetitive calculations, and print reports in an Auditor-specified format. Generalized Audit Software enables Auditors to have direct access to computerized records and to deal effectively with large quantities of data. Since GAS can quickly scan, test, and summarize all the data in a computer file, many procedures that ordinarily would be performed on a sample basis can be extended to the entire population. In addition, the use of GAS typically leads to a better understanding of automated systems and computer-based operations. It can make auditing more interesting and challenging and is an excellent way of introducing Auditors to evidence collection process and electronic data file integrity checking within an IT Environment.

Generalized Audit Software can accomplish the following audit tasks:

1. Examine records for quality, completeness, consistency, and correctness (review bank demand deposit files for unusually large deposits and withdrawals)

2. Verify calculations and make computations (re-compute interest, Bank COT, etc. and verify payroll Net pay, Deductions, etc.)

3. Compare data on separate files (compare current and prior-period inventory files for obsolete and slow-moving items)

4. Select and print audit samples (accounts receivable confirmations, customer refunds over a certain amount).

5. Summarize and re-sequence data (re-sequence inventory items by location to facilitate physical observations).

6. Compare data obtained through other audit procedures with company records (compare creditor statements with accounts payable files).

Some advanced GAS can include a wide variety of audit functions. They enable even novice-Auditors to perform professional jobs. Apart from the wide range of audit functions and the ease of use, the advanced GAS are now able to access, analyze and report on a range of different files saved in heterogeneous hardware and software platforms which are distributed through either an enterprise Intranet facilities or other means, including the global computer networks. Two common names in these features are ACL and IDEA.

GAS provides the distinct advantage over conventional programming languages of being relatively easy to learn and use. Most GAS systems require only about one week of training, and proficiency may be attained after several weeks of use. Furthermore, GAS specification coding, typically requires a fraction of the coding entries needed for conventional programming languages. This permits faster coding and reduces the likelihood of errors.

Create a video blog

Margaret Catalfamo asked:




Every organization, whether it has one employee or 500 employees, should have an annual Human Resources Audit. An HR audit is similar to an annual health check. It is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its HR functions. An audit involves systematically reviewing all aspects of the human resources functions. It also ensures that government regulations and company policies are being adhered to and your organization is not at risk for fines and penalties. An audit is not only a “check up” – you should be prepared to make the necessary changes identified by the audit. A Human Resource audit can help prevent costly lawsuits and fines by identifying weaknesses and correcting them.

Who Should Conduct the Audit?

An HR audit can be conducted by your HR staff, an outside consultant or an employment law attorney. This individual must have significant HR experience and should use a checklist or structured method to assess a company’s risks and needs. In addition to bringing key advice and knowledge of all pertinent laws to the table, an audit conducted by an outside consultant can add an extra layer of credibility to the findings of the audit. Records from a self-audit do not have the same credibility as audits done by independent sources; however it is better to do a self-audit than not audit at all.

What is reviewed during an audit?

Most audits are comprised of a series of questions separated by topic or functional area. A compliance audit is not a one-day project. It will touch all areas of HR, and may require looking at documents and policies and interviewing HR staff as well as selected employees and managers in other areas of the company. The amount of effort required depends on the size and type of company.

Most audits start with a review of existing employee handbooks and policy and procedures. This provides a starting point to assess needs and risks, identify conflicts or outdated policies and procedures and delete them, and fill gaps where policies are missing. Some of the other areas to target in an HR audit include:

Staffing: An audit of recruiting and hiring practices can quantify turnover trends, reveal gaps in meeting needs and help the organization predict future openings. It can also identify potential issues with discrimination or diversity.

Compensation/Employee Classification: An audit of these areas includes reviewing compensation, overtime, employee classifications (exempt/non-exempt), and time records.

Federal, State and Local Regulations: An effective audit examines compliance with applicable federal, state and local laws — and can prevent lawsuits and fines. Incomplete or missing I-9 forms can result in an employer being fined between $100 and $1000 for each failure to accurately complete an I-9 form.

Administration: An audit of this area examines regular HR duties, such as benefits administration and attendance tracking, and checks the handling of personnel records and confidential files.

Employee relations: An audit of employee relations issues includes review of communication processes, discipline procedures, and performance measurements.

By regularly auditing your Human Resource functions you will mitigate your risk. If you have significant compliance concerns for your company, you may want to consider an audit structured as an attorney-client privileged investigation. By having an attorney conduct the audit, you can identify and correct problems and protect certain information that may otherwise be accessible to government investigators.

The information provided in this article is based on general human resource management fundamentals, practices and principles and is not intended to be considered legal advice. Consult your employment law attorney for legal advice or legal opinions.

auditing procedures

Dr. LM Foong asked:




This TQM article is Part 8b issue, it is a continuation of Part 8a published on [May 17, 2117 19:47:31 am]. This issue will deal with some of the problems associated with the CONTROL Phase of the D.I.A.C. Improvement Methodology and how they can be overcome.

In this issue, I will share with you some of the problem with Documentation and Audit and how they were overcome by the team leader.

Case study on Documentation

A team member presented a procedure for a solution established during the improvement project. It was noted that the new work procedure was clearly indicated however several other pertinent items were omitted. It was discovered that the standard procedure format was not used.

How Documentation problem was overcome

The team member was asked to filled up all the information in the used the standard procedure format. Hence, all pertinent items were included.

Case study on Audit

Team member was assigned to audit the implementation of several solutions which was derived and agreed during the progress of the improvement project. As usual, an audit report was presented during a project progress meeting. Below are some sample of the audit progress report:-

Audit question 1: Did the worker comply with the new work procedure?

Report findings 1 : Yes

Audit question 2: What is the result of the new work procedure in terms of reject rate?

Report findings 2: Normal

What do you think about the Audit Findings? Looks alright to you? but it does not indicate what was the reject rate, correct?

How Audit problem was overcome

One of the common Audit problems is often Audit Report Findings is ambiguous. To overcome this ambiguity problem, we did the following remedies:-

the auditor should state the material facts of his audit findings. Example: the reject rate was 3.2% in 2nd shift on 22 May 2007. Provide auditor briefing to ensure expectations are clearly understood. Assign auditor from other department or area of work.


In summary, Documentation and Audit tools are quite simple but may be easily neglected. These two tools are needed to ascertain the sustainability of the improvement results.

—————————————————————-

Disclaimer: This article is written by the author based on his practical application experience. All definitions and interpretation of terminology are his point of view and has it has no intention to conflict with experts in similar topic. The author holds no responsibility for the use of this article in any way.

—————————————————————–

Free to reprint or re-publish: All rights reserved. You are free to reprint or re-publish this article as long as you include my resource box at the end of this article. Please ensure that the URL in the resource box remain intact and it is linked to the author’s website.

—————————————————————–

Caffeinated Content

Geezelle Tapangan asked:




Internal and external auditing belongs to the highest paid job profession and the most chosen area of expertise of a certified Public Accountant. Basically both are similar with several differences in their roles and responsibilities. Let us explore and learn the nature of internal and external auditing.

What is internal auditing?
According with the generally Accepted Auditing Standards the word is defined as “an independent, objective assurance and consulting activity designed to assess value and improve organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance process”.

A person who practices this profession is called an internal auditor. The internal auditor gives advice to management whether their transactions and systems are free from risk or any internal control weakness. The most basic function of the said job is to ensure that the controls in the company are enough to ensure that the company has followed the policies, procedures and guidelines.

Internal auditor has to follow four ethical responsibility namely integrity, objectivity, confidentiality and competency. Integrity means doing an honest and diligent job as well as follows the laws to be taken. Integrity is important because it is through integrity that an auditor builds trust and with that trust they can give reliable judgment. Objectivity or independence is an act whereby you will not allow yourself to engage in activities that can lead to biased opinion. Confidentiality means limiting the things to be disclosed or asking permission first before disclosing information’s during audit and you must respect the value of information ownership. The last responsibility is competency which means an auditor will just take responsibility on things that she or he is capable of doing. Competency can be acquired through proper education, trainings and work related experiences. Good ethical background is important to achieve a successful audit.

What are the important roles and responsibilities of an internal auditor?
Here are some of the roles and responsibilities of an internal auditor. They are the one who develops an annual audit plan, they facilitate compliance in accordance with Sarbanes Oxley 404 requirement, they conduct field and management reviews, they prepare the audit plan in accordance with GAAP, they prepare the working papers for audit findings and recommendations, they check the effectiveness of the company’s internal control, they are the ones who coordinate with the external auditors and they implement the quality assurance system.

What is external auditing?
People practicing external auditing is called external auditors and they are the ones who test the fundamental transactions of the companies that is the basis of the financial statements. In short they reevaluate the control procedure of the company or the overall internal control of the company. They see to it that any material information’s must be reported to the management or to a higher authority. They are the professionals who provide an opinion about the financial statements sufficiency and review the financial statements preparation and reporting.

The external auditors opinion report is consist of four paragraphs. The introductory paragraph is a statement telling that an audit has been made and what are the financial statements being checked. The second paragraph is composed of the scope of the audit and if the company abides GAAS. The third paragraph and the most important paragraph is a well explained opinion about the audited information’s. The final paragraph is explaining the effectiveness of the internal control system used over the financial reporting of the company.

An external auditor has four different types of opinion namely unqualified, qualified, and adverse and disclaimer of opinion. Among the four types an unqualified opinion is the best opinion a company can receive.

What are the important roles and responsibilities of an external auditor?
External auditors roles and responsibilities includes advising management on what areas in the internal control is at risk, recommend ways for a company to enhance their operations and strengthen their control, they protect investors from receiving incomplete, inaccurate and misleading financial information’s and lastly they add value to the effectiveness of the companies governance.

Create a video blog