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36 Cards in this Set
- Front
- Back
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Techniques in identifying problem symptoms |
1. Variance Analysis 2. Ratio Analysis 3. Trend Analysis 4. Observation of Operations |
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Variance Analysis |
-budget variance reports -significant variances must be investigated |
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Ratio Analysis |
1. Overall Ratios 2. Objective Ratios 3. Cost Ratios 4. Work standard Ratios 5. Time standard Ratios |
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Help auditor identifying problem symptoms; Show deviations from plans |
Budget Variance Reports |
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Supports evaluation of organization unit performance |
Ratio Analysis |
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Final Output vs Resource Input (ROS) |
Overall Ratios |
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Measure achievement of individual departments (Actual vs Target Sales) |
Objective Ratios |
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Performance Output vs Corresponding Costs (Expense to Sales Ratio) |
Cost Ratios |
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Work by centers vs Expected normal standards |
Work Standard Ratios |
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Performance output vs Time needed to produce output |
Time Standard Ratios |
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Performance over time is analyzed Trend may be progressing/retrogressing Significant trends must be investigated |
Trend Analysis |
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Walkthrough/Plant Visit Supports an intelligent conclusion Aware of problems not recorded |
Observation of Operations |
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Lifeblood of the audit |
Data |
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Basis for evaluation |
Audit Evidence |
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Data Type |
1. Quantitative 2. Qualitative |
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Data Sources |
1. Internally-generated 2. Externally-generated |
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Purpose and degree of measurability |
Data Type |
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Measured numerically and accurately |
Quantitative |
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Can't be measured numerically; difficult to quantify |
Qualitative |
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Depend on degree of reliability |
Data Sources |
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Primary Data within the organization |
Internally-generated |
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Secondary Data outside the organization |
Externally-generated |
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Data Qualities |
1. Accurate 2. Relevant 3. Concise 4. Sufficient |
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Neither overstated nor understated |
Accurate |
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Supports conclusions & recommendation |
Relevant |
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Brief but complete |
Concise |
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Just enough |
Sufficient |
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Data Gathering Tools |
1. Interviews 2. Questionnaires 3. Observations & Physical Reviews |
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Open, direct communication with people |
Interviews |
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Guidelines for Interviews |
1. Set a conducive time 2. Friendly 3. Directed 4. Proper & intelligent questions 5. Logical order of questions 6. Valid, meaningful responses 7. Enough time to respond 8. Alert to inadequate answers 9. Never put words in mouth 10. Properly record responses |
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Used when respondents are geographically dispersed; Relatively slow |
Questionnaires |
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Questions must |
-Be clear -Have 1 idea only -Not suggest their answers -Be easily answered -Have parallelism |
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Actual tours, field trips, demonstrations, walkthroughs, observations; Must be confirmed |
Observations & Physical Reviews |
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Data Gathering Guidelines |
1. Systematic planning - data list, classification, working papers, methods, timetable 2. Scheduling w/ personnel - adjust to personnel, get cooperation 3. Talk to operating people 4. Avoid expert image 5. Complete & accurate data 6. Record facts & their interpretation 7. Use charts, diagrams, etc. 8. Document & organize data 9. Validate conflicting/doubtful data |
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What to Avoid in Data Gathering |
1. Recording errors 2. Bias 3. Comparison of unrelated data 4. Narrow-mindedness 5. Improper sampling 6. Unnecessary words 7. Inappropriate filing |
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Constraints in Data Gathering |
1. Time 2. Cost 3. Data Availability |
