Optimization of auditing processes has always been a priority for many organizations. Therefore, the audit group is often tasked with the responsibility of prioritizing and allocating limited resources, in order to keep the enterprise’s risk at a satisfactory level. However, Companies are constantly being bombarded with information, which makes it difficult to prioritize, analyze, and utilize data in a sophisticated manner. Using a risk-based modeling approach can help to create solutions that are logically applicable to the auditing process; this will ensure productivity, by helping the auditors to strategically target audit sites, and improve post-audit processes. In essence, a risk-based method, as it relates to auditing, would help to connect the limited resources to the business risks that are failing to meet company objectives. This project explores a real-world business problem that could be solved by using this method.
Praxair is one of the largest industrial gas companies worldwide. The company produces a range of products including industrial gases (oxygen, nitrogen and argon), and surface coating (metallic and ceramic coatings, and powders). It targets its products to a variety of industries such as aerospace, food and beverage, healthcare, semiconductors, chemicals, refining, waste management, and renewable energy, just to name a few. They design, engineer, and construct cryogenic and non-cryogenic supply systems that include cylinder storage, pipelines and micro bulk delivery systems. The company operates in more than 50 countries across the world, and is headquartered in Danbury, Connecticut, United States of America.
In the past, Praxair has relied on a judgmental method of selecting sites to be audited. Judgemen...
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...eir limited resources, Praxair is not able to adequately allocate its resources in order to fulfill the business need. This project will attempt to rectify this problem by producing a feasible algorithm, and make recommendations that would enhance their system going forward.
This study undertook relevant research; by collecting data that the company had on record. After which, an analysis was done and the key risk indicators (KRI) were identified. Moreover, this analysis revealed the inefficiencies that exist within the current system, which triggered the generation of an algorithm. The developed methodology provides an effective process of well-defined instructions, and criteria that can be used for auditing each location. The developed risk-based auditing approach is a systematic, dynamic process that will help to control risks, and improve the current process.
Arens, Alvin A., Elder, Randall J., and Beasley, Mark S. (2012). Auditing and Assurance Services:
"The next step is to determine the impact that the threat could have on the organization. It is important for auditors to understand that not all threats will have the same impact. This is because each system in the organization most likely will have a different value (i.e., not all systems in the organization are worth the same or regarded in the same way). For instance, to evaluate the value of a system, auditors should identify the processes performed by the system, the system's importance to the company, and the value or sensitivity of the data in the system" (Edmead). To understand the important of a risk helps point out the businesses weaknesses. It is important that the degree of impact caused by different risks are determined. The
Identification of these risks and opportunities should include both issues specific to the enterprise, as well as those pervasive throughout the industry/sector. Are there industry standards for accounting that most companies in this industry adhere to?? Does your company comply with those standards?? How does that affect the analysis of your company?
According to the article authored by Mark Rupert, what are the seven best practices in the roles and responsibilities of an internal audit function?
...). In 2007,ASX Corporate Governance Council announced its company governance principles as well as recommendations wherein KPMG has assessed its Principle 7: system risk management, and CFO’s function in all of this. Essentially the revelation of the audit appeared to be that in fact platforms working under sound system of risk administration were working successfully in the context of financial aspects (KPMG, 2010). The risk assessment or risk management overall will offer adequacy along the extended financial plans. It is a portfolio of related expenditures that is delicate and desires definite management and financial projections which could inevitably ensures to traders and certainly stakeholders for economical victory (ACCA, 2012).
Audit Sampling is very important to auditor to make their audit because easy for auditor fulfill their job with give opinion and make a conclusion from the account balance. It is not practical for auditor to audit 100% of the items in the account balance, that why auditor apply for audit sampling to obtain audit evidence from the account balance. Audit Sampling is testing less than 100% of the item within a population on a company client to obtain and evaluate evidence about some characteristics of that population. Population means that the entire of set of data which sample are selected. The objective auditor apply for audit sampling is to provide a reasonable basis for auditor to draw a conclusion about population from which sample
With the internet accelerating the sharing and collecting of information of all types, concerns about the accuracy and protection of the collected data have grown drastically. In this document an attempt will be made to describe risks will be managed during the process of "Upgrading the existing Oracle Financials ERP implementation to 11.5.10 version". This document defines roles and responsibilities for participants in the risk processes, the risk management activities that will be carried out, the schedule and budget for risk management activities, and any tools and techniques that will be used.
When I hear the word ‘Forensic’ the idea and image of a homicide investigation in which evidence gathered is analyzed at a laboratory to determine ‘who done it’. Shows like CSI, Bones, Law and Order depicts the forensic aspect in their broadcast. Being a registered nurse, another thought comes to mind when hearing the term ‘forensic’. I like to watch Dr. G medical examiner on the Discovery channel. That is a reality show regarding investigative research on how a person died. This is done by performing an autopsy and analyzing the pathological reason for a death to determine if foul play was involved. However, I rarely placed the thought that accounting can have a forensic aspect, too. I was always under the impression that auditors were the forensic accountants. Internal Revenue Agents to audit income tax filings to make sure all income are reported, and deductions have receipts as supporting evidence. Certified Internal Auditors to look at business operations and financial statements within a corporation to make sure internal controls are in place, financial statements are properly recorded, and government regulations have been met. External auditors perform audits for SEC compliance and to attest that the company is in good standings to ensure protection of the public interest. These auditors, in essence, would be able to detect fraud in their job when reviewing audit trails and documentations. Needless to say, I my conception have been construed. There is a whole new field of accounting that is on the rise, which specifically deals with fraud detection. This is called Forensic Accounting. This area sparked my interest.
In summary, successful and effective risk management is the basis of success- ful and effective IT security. Due to the reality of limited resources and nearly unlimited threats, a reasonable decision must be made concerning the allocation of resources to protect systems. Risk management practices allow the organi- zation to protect information and business process corresponding with their value. To ensure the maximum value of risk management, it must be consistent and repeatable, while focusing on measurable reductions in risk. Establishing and utilizing an effective, high quality risk management process will lead to an effective risk handling in the
As audit firms look to invest in big data, it will be even more critical to understand the implications of using big data and analytics on the audit profession. There are multiple ways in which data analytics would enhance the effectiveness and efficiency of external audits. From looking at the complete population, to finding trends, to allowing employees to do less routine tasks, there are multiple ways big data benefits audits. Big data would also enhance critical procedures performed for the sales and collection cycle. These benefits are not without some drawbacks that would need to be addressed by the profession.
Woolworths LTD has commissioned EA partners for auditing their supermarkets chains. Therefore it is important to prepare a risk analysis report to be added in the audit plan in order to identify and analyze possible events that could have an impact in achieving the company’s objectives. The element of risk is embedded in every business, the risk of not achieving the company objective. Risk assessment is important to the effective operations of the company. Risk Assessment is increasingly in demand today because of the increase demand in transparency that revolves around risks. The business is under continuous scrutiny of whether the correct mechanism was in place at the time of the crisis or whether the correct information was delivered and so on. This is why risk assessment has become a part of the business auditing today.
As the first step, identify potential risks plays a crucial role in the risk management process. The core purpose of identifying risk is to figure out causes of risk and analyze result caused by the risks and its probability . Hence, risk identification can begin with the source of problem, or with the problem itself. The chosen method of identifying risk may depend on culture, industry practice and compliance. The identification
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.
Risk management is a process used in all industries to reduce the risk. The Risk management tool usage changes from sector to sector and hence each sector has developed their own risk management tools and methodologies to mitigate the risk. But the concept remains the same behind all the tools (Ropel, 2011). The main steps for risk management irrespective of the sector are:
The major characters of the tradition audit are all information what is needed by auditors are on the paper and the manual calculators and without high communication technology. Auditors usually were limited by the place in the paper time. When a several people are working on the same auditing project for a client with offices in cities across the country, even worldwide, it takes a lots all time those auditors get the information which they need from the client, even there is risk paper information disappear for many reasons. on the another hand, mail paper information increase the auditing cost. The mistake caused by the manual calculators inevitably, no matter how fixed auditors concentrate on recalculate is, after all auditors are human. The global business become major in the modern business world, some example, several auditors who are in different locations are working a same auditing project, or auditors are in different city even country with the client, when there is issue among these auditors or between auditors and client, they only can communicate with each other by phone or be together and have meeting. Phone call can not make sure information been watched in the same time when the voice is talking about the issue, but having a meeting takes time and money make all people together, it increases auditing cost.