ACCA AA Syllabus C. Internal Control - Operational assignments - Notes 7 / 8
This looks at..Are business operations being undertaken efficiently and effectively?
An assignment based on operations should identify the possible risks involved in that operation, the procedures in place to mitigate the risks and whether those procedures are being followed.
An Operation which may be examined is:
Procurement
Are the systems in place for control of purchasing operating effectively?
Identify key risks
What procedures are in place to reduce risk?
Are they being followed?
Are they effective?
Conclude and recommend
Marketing
Is the company getting value for money from its advertising?
What were the objectives of various campaigns? – Were these achieved?
Any evidence of fraudulent use of funds?
Entertainment expenses reasonable?
Treasury
Treasury is the management of the funds of the business.
This is a high risk area and there should be extensive controls in place to ensure risk is mitigated.
Internal audit should ensure procedures in place to manage exposure to foreign currency risk, interest rate fluctuations and inflation are all working correctly.
Human Resources
It is important that controls over human resources are strong.
The company will have policies in place and it is the responsibility of internal audit to ensure that these policies are adhered to by managers.