©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 31 Specific Criteria Is each piece of equipment operating at least 60 percent of capacity for three months or more each year? Does layout facilitate the movement of new materials to the production floor? Does layout facilitate the production of finished goods? This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 32 Specific Criteria Does layout facilitate the movement of finished goods to distribution centers? Does the plant layout effectively use existing equipment? Is the safety of employees endangered by the plant layout? This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 33 Sources of Criteria Historical performance Benchmarking Engineers standards Discussion and agreement This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 34 Phases in Operational Auditing Planning Evidence accumulation and evaluation Reporting and follow up This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 35 Planning Staffing Understand internal control Background information Decide on appropriate evidence Scope of engagement This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 36 Evidence Accumulation and Evaluation Documentation Client inquiry Analytical procedures Observation This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 37 Reporting and Follow Up 1. In operational audits, the report is usually sent only to management Two major differences in operational and financial auditing reports: 2. Tailoring of each report is required in operational audits This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 38 Examples of Operational Audit Findings Outside janitorial firm saves $160,000 Use the right tool Computer programs save manual labor This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 39 End of Chapter 26 This is trial version www.adultpdf.com . Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 37 Reporting and Follow Up 1. In operational audits, the report is usually sent only to management Two major differences in operational and financial. Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 34 Phases in Operational Auditing Planning Evidence accumulation and evaluation Reporting and follow up This is trial. version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 35 Planning Staffing Understand internal control Background information Decide on appropriate