Fernando, Prince Jeffrey G.

BSA 4A
Operations Auditing: Assessment #2

This topic taught me the definition of operations auditing. Operations auditing is a review of how
a company moves toward its goals and objectives, with the goal of identifying ways to enhance efficiency
and effectiveness. Some key languages were also mentioned in the definition. We have objectivity and
independence. Their conclusions should be fair and unbiased, based on data, and not influenced by
management or personal relationships. Conflicts may arise when an auditor is not independent and
objective. We also have assurance. The opinions of an auditor on the correctness and completeness of data
being evaluated are referred to as assurance in auditing. Because there are limitations to providing absolute
assurance, an auditor can only provide reasonable assurance.

Furthermore, risk-based audit refers to the auditor's approach when conducting an audit, in which
he or she focuses on the various types of risks that may be associated with the audit process and may result
in material misstatements. The possibility that an auditor will issue an unqualified report due to the auditor's
failure to discover serious misstatements, whether due to fraud or error, is referred to as audit risk. The risk
is divided into two categories: inherent risk and risk associated with the nature of the business or transaction,
which are referred to as detection risk and control risk.

Business failures caused by poor management decisions and practices were also discussed. Poor
management decisions and practices affect all departments in a company in different ways. The threats and
vulnerabilities in an operation were also discussed in relation to this.

Auditor importance was also discussed. Auditors provide their clients with a very valuable service.
There are two types of stakeholders: primary and secondary. Employees, suppliers, customers, creditors,
and investors are more likely to be concerned about the company's financial situation. Government, media,
activist groups, business support groups, communities, and the general public are examples of secondary
stakeholders.

Finally, we were assigned the task of researching the standards that an auditor must adhere to when
conducting an audit.