©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