What Is an Operational Audit Process? Advantages of Operational Audit

So, to answer the question as to the meaning of the Operational Audit Process, it can be termed as an audit focused on increasing efficiency, effectiveness, cost reduction & business operations. Its main focus is to remove errors rectify mistakes shorten overstretched procedures and processes that ultimately affect the cost of the business, where it could be reduced it is not focused on whether things were done correctly or not but rather on improving and moving towards making possible improvements so that the processes and procedures can be improved. 


Objectives:


Primarily there are 2 main objectives:


1) Appraisal: It can be of the company’s performance, employee performance, remunerations, and the value of assets, creditors/debtors, workforce, company costs, and product retail prices.

2) Evaluation: It can be of company policies, company plans, organization structure, controls, profitability, and workforce.


Advantages of Operational Audit:


1) Opportunities for Improvement: Getting an operational audit allows management to compare and measure the effectiveness of various departments within the organization. This is a fantastic way of finding the best practices for completing a process. Management simply observes the performance for each process and then filters the best process among all of them. Thus, in this way businesses can improve their performance, resulting in the performance of the whole business getting better.


2) Effectiveness of Employees: In an operational audit the auditors do not just simply audit the performance of the organization, they also look for better ways of accomplishing the same tasks outside of the organization including ways of increasing work efficiency and achieving various tasks in limited time thus improving the work performance of employees. The operational auditor also takes importance in discovering bottlenecks and looks at whether removing the errors at hand is possible. 


3) Removal of Discrepancies: An operational Auditor would rather focus on increasing ways to reduce cost and increase productivity in that case a lot of shortfalls or shortcomings are reduced and removed indirectly which helps in an actual increase in production and output.


Practices of Operational Audit:


1) Checking of Established Goals: To establish goals the operational auditor has to take all the products, projects, processes, and all verticals and any other relevant information to look at the system being audited.


2) Setting up an Operational Audit Program: To set up a competent program to determine all sorts of scope, risks & any resources involved.


3) Working towards the defined objectives: The next task would be to work towards achieving the said goals via a competent team and an operational team head.


4) Monitoring & assessment of the Program: To check, control, and monitor all sorts of objectives along with the performances of the audit team. To further strengthen the audit via feedback and suggestions from all stakeholders.


5) Reviewing & improvement of the Audit Program: To review and evaluate the objectives given along with the overall development for continuous improvement. The Operational Auditor should include all kinds of risks associated and various procedures along with security and confidentiality issues as needed.


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