PALATAN, Randell Jan M.

BSA35 Operations Auditing Quiz #8

BSA-III-A31A Mr. Clyde dela Fuente October 30, 2020

ANSWERS:
1. The CCCER/5C Model in this chapter is constituted by Criteria, Condition, Cause,
Effect, and Recommendation geared towards a better audit program. To explain each
element, Criteria are the standards set by the organization for their operations to meet
client expectations while Condition is the actual and current state of operations as per
discovery of the auditor. Cause is the root source of problems, issues, and risks of why
such conditions exist, on the other hand, Effect is the subsequent risk the organization
will face if risks are not resolved. Meanwhile, Recommendation is the ultimate product of
the audit program, corrective and alternative courses of action to resolve causes and
prevent their effects, and improve conditions to meet the criteria. As can be seen, the
CCCER elements are interrelated with each other.

2. Criteria is constituted by level of standards that determine “what should exist”. It is

constituted from various references such as the organization’s vision, mission, goals, and
objectives, relevant accounting and financial practices and standards applicable to the
organization, government laws, client expectations and many more. Operational auditors
can identify the criteria by looking at these references and benchmarking industry
standards similar and applicable to the business organization. It is important to identify
standards so an auditor will know what correct state the business should be in.

3. Condition, on the other hand, is the current state of “what is in place” in the organization.
It is constituted by factual and conclusive evidences gathered after the performance of
audit through various methods such as review, observation, interviews for testimonials,
and more. It can be defined by acquiring relevant and sufficient data to determine the
current level and compare and contrast it to the criteria or standards set by the
organization. It is important to know the current state to determine the gap and how to
close it.

4. Cause is constituted of existing root problems that may include faulty systems, bottleneck
in the process, low quality products and services, and anything from the eight areas of
waste. As there might be several existing root causes that determine current conditions,
operational auditors must put immense and effort and time to locating these causes.
Causes can be found by simply being curious, ask relevant questions over and over again
and get to the bottom of things you want to find out. As discussed, the utilization of the
Ishikawa diagram could prove to be helpful in determining root causes of bigger
problems.

5. Effect is constituted by informed predictions, forecasts, and estimates on future risks,

exposures, problems, and issues the organization may face in the future if current causes
aren’t eliminated and conditions aren’t improved to meet criteria. The effects can be
PALATAN, Randell Jan M. BSA35 Operations Auditing Quiz #8
BSA-III-A31A Mr. Clyde dela Fuente October 30, 2020

calculated by careful study of trends, historical data, and existing evidences to predict
future conditions, costs, and more.

6. Recommendation is constituted of corrective and alternative courses of actions that can

be taken to correct the current system and operations. These corrective actions are formed
to eliminate error by redesigning the process, replacing parts, detecting errors early on,
minimizing effects of error, making work easier, and more. Operational auditors can
formulate these recommendations by in-depth analysis of the problems, conclusive
evidences, relevant data and information, and how to solve it in the most cost-effective
way possible.

7. There are three methods presented that can assist operational auditors in better finding
root causes of current conditions and deficiencies. The first of which is the 5 Whys, in
explanation, it simply means to keep on asking “why?” until the root cause is identified.
Operational auditors should not settle for superficial information provided by the people
inside the organization, he/she must gather as much testimonials as possible until the real
reasons are identified. The second one is the Cause and effect diagram or as we know it,
Ishikawa or Fishbone diagram. To explain, it shows the roots of several bigger problems
that then creates the main problem. A diagram helps everyone to understand the situation
through a visual aid. The last methodology is the Drill down method which is the
breaking down of the current condition into smaller parts, much like the Ishikawa
diagram, to gain better understanding of the main problems identified.

8. To better solidify final recommendations and findings and make them more persuasive to
stakeholders especially to the decision-makers, operational auditors must perform several
actions. First, quantify as much as possible, or put wordy paragraphs, evidences, data,
and info into numbers that can be understood by the decision makers. Next is to ensure
that all findings are significant and relevant to influencing decisions. It doesn’t matter if
you have hundreds of evidences, if none of it is relevant, then the recommendations are
worthless. Lastly, the use of cost benefit approach in creating recommendations is a must
for all operational auditors. Auditors must utilize differential, opportunity, and relevant
costs to determine whether choosing one alternative action over the other will result to
more benefits than costs.

9. Logic is based on facts and the truth, not by uniformed opinions are fake news. The use
of logic as a persuasive tool is a simple math and science tool as basic as one plus one.
That by implementation of recommendations, causes will be deducted, effects will be
reduced, and conditions will add up and multiply in quality to meet criteria. The character
of the presenter is also an important tool to build credibility and a respective relationship
with decision-makers. By having a credible character, being yourself, and creating a more
personal approach to report, tension between you and the audience will break and they
will trust you more. Lastly, the usage of emotion will show that you care not just for any
money or compensation but the growth of the organization and its people. By showing
PALATAN, Randell Jan M. BSA35 Operations Auditing Quiz #8
BSA-III-A31A Mr. Clyde dela Fuente October 30, 2020

emotions and genuine care to the client, they will believe that the recommendations you
made will help them and not the other way around.

10. There are many tactics used to persuade and divert attention of the client, auditors, and
decision-makers. One is the repetition of lies in hopes that by repeating it over and over,
it will sound more like the truth and people will believe it as evident with historical
revisionism. Another is the utilization of the will of majority where one’s own
perspective is generalized to look like the majority’s perspective as well. Lastly, the
creation of fake data and information or elimination thereof to fit their own agenda and
objectives. To avoid falling prey into one, operational auditors must utilize the
knowledge of these tactics to be more vigilant and aware to avoid these risks. There must
be full transparency and reliability. Engage with people in the performance of the process
and document everything throughout.