OpAudCh03 CBET 01 501E Toralde, Ma - Kristine E.

TORALDE, MA.KRISTINE E.
CBET-01-501E
1. What are the benefits of the internal audit function establishing a risk-based plan when
identifying the priorities of the internal audit activity?
Management must be aware, engaged, and knowledgeable to learn from

history, understand the present, and prepare for the future. For when that risk
occurs, at least the company has prepared and somehow reduced the damages.
2. Describe three ways that internal auditors can better identify the risks related to the
area under review.
There are multiple templates and lists available, often organized by industry.
COSO, ISO, Information Technology Infrastructure Library (ITIL), CVNET, and
others have prepared lists that can help to identify some of the key risks that should
be included in the assessment.
Risk identification exercise people with an extensive knowledge of the

program or process that will be analyzed.
Some of the common risks that operational auditors should consider during
their risk assessments. Not all risks are applicable to every organization because
differences in industry, business activities, geographic location, and size of
organization make a difference. In addition, when performing operational reviews,
auditors must examine a wider assortment of risks, and not just financial ones.
3. What are three internal and three external factors affecting a typical organization? How
do these factors affect the future prospects of the organization?
Internal
Equipment.
The types of equipment available and the ways they are used limit the ability
of the process to produce more high quality goods and deliver services.
People.
Lack of skilled and motivated workers limits the productive capacity of any
process. Attitudes and other mental models (e.g., feeling defeated,
victimized, or hopeless) embraced by workers can lead to behaviors that
become a constraint on the process.
Policies.
Written and unwritten policies can prevent the process from producing more
of higher quality goods and services.
External
Economic.
Natural environment.
Technological factors.
Management must look into the past and the future to identify trends,
shifting demographics, new markets, and competitor activities, among others. In
many cases, these events are influenced by technological changes, economic
development, increases in literacy levels, higher education attainment, natural
events (e.g., floods and hurricanes), and demographic changes.
4. Describe an event that has transformed or disrupted an industry and include: (1) An
example of an organization that benefited from that opportunity and (2) an example of
another organization that mismanaged it and suffered losses as a result.
Events can have either a positive or negative impact representing risks and
opportunities. A warehouse without a fire sprinkler system could suffer a total loss,
or at least far more extensive damage than a building with a fire sprinkler system
that is professionally designed, installed, maintained, and inspected regularly.
The occurrence of a risk event could have a negative effect on the

relationships that the organization has with its customers, suppliers, the
surrounding community, investors, and other stakeholders. The loss of confidence
in the organization, its leadership, its products, and services can be severe.
5. List three organizations that provide lists of common vulnerabilities useful during a risk
assessment.
The Federal Emergency Management Agency provides the Mapping

Information Platform and the Risk MAP (Mapping, Assessment, and Planning) to
help organizations by delivering data that increases public awareness and leads
to action to reduce the risk to property and life.
The US Geological Service (USGS) has a great deal of seismic information to

help organizations identify their vulnerabilities from fault lines, and incident history
as a possible gauge to future activity through probability analysis based on
location, time span, and radius from a designated location. The USGS also
provides information related to landslides, volcanic activity, while the Occupational
Safety and Health Administration of the US Department of Labor,also provides
information about workplace hazards.
The National Weather Service provides rain, hurricane, air quality, winter
storm, flood, and marine weather information, which can have a substantial impact
on the health, safety, and operation of organizational process. Recall the impact
that extreme cold and heavy snow fall had on the.
6. List three of the benefits of CSA programs.
CSAs require managers to think about the design and condition of their areas
of responsibility, and assess the presence and quality of the related controls.
They consist of questionnaires and other forms that process owners complete
that identify the major activities in their programs and processes, the objectives,
risks and controls, the individuals that perform key tasks and controls, and the
major challenges affecting these programs and processes.
The information captured during the CSA process should also be subject to
audit review and comparison between what the process owner indicated in the
forms and what the internal audits identify in terms of risk and control effectiveness.
Discrepancies should be analyzed and discussed with the corresponding manager
and the initial assessment updated.
7. Describe three risks that are unique to each of the following two manufacturing
approaches: made to order (MTO) and made to stock (MTS).
Make to Order (MTO) is manufacturing product after the order is received. The
risk in this kind of manufacturing strategies is for example, there’s a lot of order
and there is a bottleneck or a slowdown in the steps of manufacturing that result
to inefficiency of production. Another risk is managers should have a reliable
suppliers, because if the supplies is not present in the time there’s an order it will
result to long cycle time and that decreases the customer satisfaction.
Made to Stock (MTS) products are manufactured in advance. The risk in this
kind of manufacturing strategies is for example, since the production is based on
demand forecast, it should accurate there will be a problem if the forecast is not
accurate. Another risk if for example you use past information to make forecast
and you thought it was accurate but because of unpredictable nature of consumer
trends it can be different.
8. Explain why internal auditors should consider bottlenecks, long cycle times,
redundancies, and reprocessing as operational risks.
It is important for internal auditors to consider bottlenecks because it slow down

or even stop the work. In other words it is the delay in the process they should
consider it because if the slowdown is the problem for the longer term internal
auditors should investigate further because the impact is more substantial.
Long cycle times have an impact on customer satisfaction because if the
product is made too long there may be a shortage of production, and if customers
also need that kind of product they can use other products available in the market
and if that product meets their needs, the customer will buy that product instead of
waiting for that product to appear in market. Long cycle time make company spend
more, because it needs to be stored for a long time and other cost it need.
9. What are the risk implications of outsourcing? Explain why management must remain
vigilant even if a process and related activities have been outsourced to another
organization.
Outsourcing firms carries risk and challenges, including different regulations,

currency exchange exposure, language barriers, cultural differences, the risk of
supply chain disruption, and poor quality. Management must remain vigilant
because there are risk in the third party relationship. Since some of these third
parties could have access to the organization’s computer systems, the risk of a
data breach increases as was evident in the massive data breach at Target where
hackers used stolen credentials from a refrigeration contractor to plant malware
that collected customer data. Internal auditors should make sure their
organizations are practicing effective risk management on their third party
relationships.
10. What are some of the practices expected of organizations to fight corruption and
support efforts to decrease institutional corruption?
Transparency International (TI) publishes the annual Corruption Perceptions

Index (CPI), which measures the perceived levels of public sector corruption
worldwide. Business leaders, policy makers, internal auditors, and other stakeholders
use this and other reports from TI as a gauge and input when performing risk
assessments. Internal auditors should examine where their organizations operate,
where their suppliers operate and where their customers reside, and evaluate the
implications of their unique geographical network to their risk profile.
1. Hernan, M. Operational Auditing: Principles and Techniques for a Changing World.

Risk Assessments. P.63 New York. CRC Press.
Risk Assessments. P.67-71 New York. CRC Press.
Risk Assessments. P.76--77 New York. CRC Press.

OpAudCh03 CBET 01 501E Toralde, Ma - Kristine E.

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

OpAudCh03 CBET 01 501E Toralde, Ma - Kristine E.

Uploaded by

Copyright:

Available Formats

TORALDE, MA.KRISTINE E.

Management must be aware, engaged, and knowledgeable to learn from

Risk identification exercise people with an extensive knowledge of the

The occurrence of a risk event could have a negative effect on the

The Federal Emergency Management Agency provides the Mapping

The US Geological Service (USGS) has a great deal of seismic information to

6. List three of the benefits of CSA programs.

It is important for internal auditors to consider bottlenecks because it slow down

Outsourcing firms carries risk and challenges, including different regulations,

Transparency International (TI) publishes the annual Corruption Perceptions

1. Hernan, M. Operational Auditing: Principles and Techniques for a Changing World.

You might also like