Resources

• Articles
• Legislative Updates
• Economic Recovery Services
• Newsletters
• Payroll Tax Guidelines

 

Operational Audits Can Identify Opportunities and Problems

Numbers don’t lie, but they also don’t fully reveal whether a business is performing at its best. Financial statements, for example, can only reveal a problem, not identify its cause. As a result, employers who want to take full stock of their businesses should consider undergoing an operational audit.

Beyond Figures

During an operational audit, an independent auditor or other objective third party reviews critical processes and goals, assesses whether a business uses resources economically and efficiently, and identifies opportunities for improvements. A thorough audit also pinpoints the operational causes of any financial problems. For example, an operational audit can help you locate inefficiencies in project budget management, closing processes and risk management.

One Step at a Time

A formal operational audit generally includes the following steps: 

Introductory meeting. The auditor gathersp information about the company, includingp history, philosophy, goals, policies and strategies.p Company representatives share any concerns orp questions they may have about the process.

Management survey. The auditor interviewsp managers for details of the company’s systemsp and procedures. Topics discussed may includep organizational structure, hiring and selection, worker relations, and performance management. The auditor will evaluate how well the team is able to meet the owner’s expectations and whether appropriate resources are being allocated to meet project needs.

Employee survey. The auditor observes and interviews workers to gain a complete picture of functional responsibilities, competencies, workload distribution and staffing levels. He or she will also identify weaknesses in the labor force that require training. For example, if your company has a high number of reportable accidents, the auditor may recommend safety classes for affected workers.

Audit Plan. The auditor develops a written plan that delineates the objectives and steps to follow during the audit. Every reasonable attempt is made to schedule audit procedures around busy times to minimize disruptions.

The audit. The auditor evaluates problem areas, sensitive activities and operations identified in the field survey. The audit’s duration depends on its scope, level of cooperation, and access to personnel and records. The audit also maps out current reporting efforts for sales efforts, productivity, billing, cash-flow management, risk management and financial reporting.

Final report. This report states the auditor’s recommendations and conclusions and is supported by documented facts and opinions gathered during the audit. The auditor considers the costs and benefits of potential changes, but it’s up to management to implement best business practices.

An Audit That Pays

Companies are so busy with the day-to-day< demands of running their businesses that they typically don’t have an opportunity to focus on whether they are performing optimally. By undergoing an operational audit, you will be better positioned to compete in today’s challenging business environment and realize improved profits at the same time.

For more information, contact:

Thomas J. Menk, CPA
Accounting & Auditing Shareholder
[e] tmenk@alpern.com
[p] 412.281.1566

 

---

Comments or Questions

First Name:

Last Name:

Reference Article

Company

Phone:

E-mail:

Website

Your Comments or Questions:

All Fields Required