Operational

Auditing
Nizhel V. Pimentel
Evaluating the effectiveness and
efficiency of operations
 Efficiency and Effectiveness
How do you define and measure?

Efficiency Measurement tools

● is the ratio of outputs to inputs, or how
well a process uses its resources to
achieve its goals
Process metrics

Effectiveness
● is the degree to which a process meets
its intended outcomes, or how well a
process satisfies its customers or Process Process
stakeholders improvement benchmarking
 Process Metrics

Customer
Time metrics Cost metrics Quality metrics satisfaction
metrics

how well a process how satisfied the

how much a
how long a meets the customers or
process consumes
process takes to standards or stakeholders are
or generates in
complete. specifications of its with the process or
terms of money.
outputs. its outputs

operating satisfaction score,

cycle time, lead defect rate, error
expenses, retention rate, or
time, or throughput rate, or yield
revenue, or profit loyalty
 Process Can be internal or
Benchmarking The method of
external, depending
on whether you
evaluating your compare your
process against a process to another
standard or a best process within your
practice organization or to a
process outside your
organization.

Steps: define the scope

and objectives of the
Can help you identify benchmarking project,
gaps, strengths, select the benchmarking
weaknesses, and partner or source, collect
opportunities for and analyze the data,
improvement in your identify and prioritize the
improvement actions, and
process. implement and monitor
the changes.
 Process Improvement

The method of modifying or redesigning your process to achieve better results.

Can be incremental or radical, depending on whether you make small changes or large
changes to your process.

Can use various tools and techniques, such as flowcharts, diagrams, charts, graphs,
models, simulations, surveys, interviews, observations, brainstorming, root cause
analysis, value stream mapping, lean, six sigma, kaizen, or agile.

Steps: define the problem or opportunity, measure the current performance, analyze the
root causes, design and test the solution, implement and control the solution, and
evaluate and sustain the results.
Operational Audit
Deep dive information & tools
 Operational Audit

are a forward-looking process, and are part of many organizations’

ongoing business improvement process toolkit.

The findings of operational audits are intended to diagnose which areas

need attention and to safeguard assets by averting potential future risks.

“A systematic process of evaluating an organization's effectiveness, efficiency and economy of

operations under management's control and reporting to appropriate persons the results of the
evaluation along with recommendations for improvement.”

Are a ‘deep dive’ into every facet of management. As a result, start-to-finish time frames can vary
from a few weeks to many months, depending on scope, complexity, and size of the organization,
and whether the audit is for the entire entity or a particular business unit.
Operational
Audit
Challenges Change management

Operational auditing expenses

Auditor evaluation

Demand for internal auditing experts

is increasing
Financial Audits or Review
Different types of
Operational Audits operational audits
Department Reviews

Information System (IT) Audits

Investigative Audits

Compliance Audits

Marketing Audits

Follow-Up Audits
Main standard areas
that govern audits
(ISO 19011)
 Operational
audit process
flow
Performance management system tools

The BSC or Balanced Score Cards

The MBO or Management by Objectives

The KPIs or Key Performance Indicators

The OKRs or Objectives and Key Results

Budget Driven Business Plans and Objectives

HR Driven Reviews
Process improvement methodologies

PDCA
Kaizen
cycle

TQM TOC
 Key operational audit tools

Equipment Inventory
Audit Project Plan Stock Inventory Basic Inventory Asset Tracking Tracking and
Template Control Template Control Template Template Management
Template

Change
Company Goals Risk Analysis Matrix SWOT Analysis Work Schedule
Management
Tracker Template Template Template Template
Process Template

Information
Project
Gathering Root Cause Risk and Control Business process
Management
Template /Marketing Analysis Template matrix mapping
Template
Survey Webform
Thank you!