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Chapter8

The document discusses operational audits and how internal auditors can apply various frameworks to assess and improve operations. It addresses how internal auditors can use financial statement assertions and the "7Es" to evaluate operational success. The importance of focusing audits on business objectives is explained, and what should be done if objectives are unclear or unrealistic. Lean Six Sigma methodologies and their relationship to internal audit work is discussed. Key aspects of Six Sigma such as the error rate at the Six Sigma level and whether all processes should operate at this level are covered. Examples of applying Six Sigma in a service organization are requested. The elements of the DMAIC methodology and the seven quality management principles of ISO 9001 are also listed.

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Keanne Armstrong
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1K views2 pages

Chapter8

The document discusses operational audits and how internal auditors can apply various frameworks to assess and improve operations. It addresses how internal auditors can use financial statement assertions and the "7Es" to evaluate operational success. The importance of focusing audits on business objectives is explained, and what should be done if objectives are unclear or unrealistic. Lean Six Sigma methodologies and their relationship to internal audit work is discussed. Key aspects of Six Sigma such as the error rate at the Six Sigma level and whether all processes should operate at this level are covered. Examples of applying Six Sigma in a service organization are requested. The elements of the DMAIC methodology and the seven quality management principles of ISO 9001 are also listed.

Uploaded by

Keanne Armstrong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 8

QUESTIONS
1. Use operational events as examples to show how internal auditors can use financial statement
assertions in their operational audits.
In an audit of internal control over financial reporting, the auditor must obtain sufficient competent
evidence about the design and operating effectiveness of controls over all relevant financial statement
assertions related to all significant accounts and disclosures in the financial statements.

2. Use operational events as examples to show how internal auditors can use the 7Es to assess and
improve operational success.
Operational objectives are made with a broader, more balanced viewpoint: retrospectively as relates to
past activities to report on past practices, and prospectively, related to the future implications of these
practices. When these operational goals are seen from that perspective, it becomes apparent that the
auditor is evaluating the program or process’ ability to execute flawlessly in the future. Operating
flawlessly is the key goal of quality improvement programs.

3. Explain the importance of focusing operational audits on management’s business objectives. What
should be done if business objectives have not been identified or are inadequate (e.g., unclear,
unrealistic, and completion cannot be verified).
Businesses can thus improve their performance team by team, resulting in the performance of the
whole organization getting better.

4. Prepare “an elevator pitch” to explain to someone that internal controls are not obstacles to business
success, but rather enablers.
5. How are Lean and Six Sigma methodologies related to the work of internal auditors?
The goal of all Lean Six Sigma and internal audit projects is to improve internal controls by avoiding
expenses that add no value to the organization.

6. What is the error rate (DPMO) for a process operating at the Six Sigma level?
Six Sigma is often wrongly defined as "3.4 defects per million products or in rate it is 0.00034

7. Should all processes operate at the Six Sigma level? Why or why not?
For me it is yes because six sigma can reduce defects by 0.00034 so that this is very good approach to
improve the operation.

8. Give two examples to show how Six Sigma can be applied in a service organization.
a. Improve effectiveness of an organization

b. Reducing the defects of an organization

9. What are the elements of the acronym DMAIC?

 Define
 Measure
 Analyze
 Improve
 Control

10. What are the seven quality management principles of ISO 9001?

1. Customer Focus
2. Leadership
3. Engagement of people
4. Process approach
5. Improvement
6. Ecidence-based decision making
7. Relationship management

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