Operational audit

Operational audit is the type of audit service that the review is mainly focused on the key processes,
procedures, system, as well as internal control which the main objective is to improve productivity, as
well as efficiency and effectiveness of the operation.

The operational audit has also targeted the leak of key control and processes that cause waste of
resources and then recommend for improvement.

For example, in a dry-cleaning business, operations would include all work that contributes directly to
cleaning customers’ clothing. An operational audit in this case would consist of an examination of those
procedures used to complete the dry-cleaning process.

Significance

The purpose of an operational audit is to improve the efficiency of day-to-day operations. In other
words, managers review the routine processes and procedures of those employees, such as production
workers, who do the primary work of the company. Managers use the operational audit to evaluate and
analyze the current effectiveness of a company’s operations while identifying areas of potential
improvement. The identification of areas requiring improvement is a key aspect, as the fundamental
purpose of the operational audit is to improve effectiveness.

Organizations of every type — government, universities, hospitals, manufacturers, banks, and others —
need to understand where they are doing well, and where they need to improve to achieve sustainable
growth. Many companies are looking to operational audits to create greater value by improving
operational performance including dimensions of quality, speed, agility, efficiency, environment,
customer value, and cost.

Examples are:

1.Examine employee time records and personnel records to determine if sufficient information is
available to maximize the effective use of personnel.

2.Review the processing of sales invoices to determine if it could be done more efficiently.

3.Review the acquisitions of goods, including costs, to determine if they are being purchased at the
lowest possible cost considering the quality needed.

4.Review and evaluate the efficiency of the manufacturing process.

5.Review the processing of cash receipts to determine if they are deposited as quickly as possible