CHAPTER 9

1. Explain the elements of the CCCER/5C model.

The CCCER/5C model is commonly used by internal auditors to document internal audit findings.
CCCER stands for criteria, condition, cause, effect, and recommendation. The criteria are what was
anticipated to exist or occur. The condition refers to what exists. This is what the auditor found out as a
result of the application of audit procedures. The cause is the reason why the condition exists and what
is the difference of it from the criteria. Internal auditors should concentrate on the root cause of the
issue and stop dwelling on symptoms. The effect is also called the consequence. It consists of the impact
of the condition. Lastly, the recommendation is the action needed to correct the condition so that the
performance is consistent with the criteria (Murdock, 2016, pp. 221-224).

2. What constitutes criteria and how can operational auditors identify it?

Criteria include an organization's policies, procedures, and requirements. This is set by

appropriate stakeholders that are based on the performance standards or goals. Criteria can be
identified by internal auditors and can be established through either internal or external expectations.
External expectations such as those stated in government laws and regulations and internal
expectations in the case of the organization's policies and procedures. Internal auditors can also use the
mission, principles, and practices of the organization as the basis for their analysis. The criteria are those
that should be in place (Murdock, 2016, p. 222).

3. What constitutes the condition and how can operational auditors define it?

Auditors define the condition as the result of the auditing procedures applied. It is the evidence
found by the internal auditors during a review. This can be found after applying internal audit
procedures. Comparing to the criteria which refer to those that should be in place, the condition is the
existing state or those what is in place (Murdock, 2016, pp. 222-223).

4. What constitutes the cause and how can operational auditors find it?

Cause addresses the question "why did the problem occur?". Therefore, it is the reason why the
condition exists. By comparing the anticipated and actual conditions, internal auditors may find the root
causes of the condition. Failure to determine the root cause can hinder the work of the auditors and
prevent them to make sound decisions and recommendations concerning the organization's problems.
Misdiagnosing the cause of the problem and concentrating on correcting symptoms are the common
mistakes of internal auditors do that keep them from understanding the root causes of the issues. To
provide effective solutions to the company, internal auditors must be vigilant and find ways to quickly
understand the causes, reasons, impacts, and implications of the problems found (Murdock, 2016, p.
223).

5. What constitutes the effect and how can operational auditors calculate it?

Effect constitutes the consequence of the condition identified and it is the result of the issue
itself. It answers the question "what are the risks or negative outcomes due to the finding?' and "what
will the organization, its programs and processes will face because the condition does not comply with
the criteria?". Operational auditors can measure the effect if they quantify it as much as possible. As this
will not only make the finding persuasive, it can also be used as a valuable tool to assess whether the
finding has validity or not (Murdock, 2016, pp. 223-224).

6. What constitutes the recommendation and how can operational auditors formulate it?

Recommendations are the actions or suggested actions that will neutralize the cause, avoid the
potential consequences, and return the condition to the desired state if successfully enforced or
implemented. The reliability of the recommendation depends on the ability of the auditors to analyze
and understand each aspect of the CCCER model. In an internal audit report, the recommendations are
intended to help the company meet its goals and objectives. Operational auditors may formulate
recommendations by considering effective and efficient processes that may help correct issues such as
Poke Yoke or mistake-proofing (Murdock, 2016, p. 224).

7. Explain three methodologies that can help operational auditors find the root cause of operational
deficiencies.

Murdock (2016) enumerates three methodologies that can help operational auditors to find the
root cause of operational deficiencies which are the 5 Whys, cause and effect diagram (fishbone
diagram) and drill down (p. 223).

Correcting a problem quickly may be a convenient solution but it doesn't protect your work
process from repeated errors that may take place. Therefore, an organization must concentrate on
identifying the root cause and tackle it properly. Using the 5 Whys will help the organization find the
root cause of any issue and protect the process from repeated errors and failures.

Before beginning to think of solutions, it is also important to explore all the things that might
cause the problem. The diagram of cause and effect (fishbone diagram) will help to define potential
causes of a problem and to organize ideas into useful categories. It is a visual way of looking at where
the issue might have begun.

Drill-down is another strategy for finding the root causes of a problem. A drill-down is a
technique that helps you to gain an understanding of the root causes of the issues by splitting the
condition into smaller parts to gain a clearer understanding of the larger picture.

8. List three actions that can help to make findings and recommendations more persuasive.

It is the responsibility of the internal auditor to ensure that conditions and activities are carried
out as planned and to identify opportunities for improvement of the organization. To be effective and
efficient, internal auditors must be able to persuade the appropriate stakeholders to take the
recommended action regarding the issues within the company. Murdock (2016) enumerated actions to
help internal auditors make findings and recommendations more persuasive (p. 225).

Reports without sufficient evidence to support specified claims may leave the readers confused.
Internal auditors must, therefore, quantify the data as much as possible. This will help the readers to tell
how large the issue is in monetary terms and other quantitative elements such as percentages, number
of units, and individuals affected. Also, internal auditors must make sure that the findings are significant.
Sufficient data and details of the findings should be obtained by the readers to be more persuasive.
Findings and recommendations will be more convincing if the cost/benefit involved is considered by
internal auditors. Internal auditors should analyze quantitative and qualitative costs and benefits in an
attempt to refrain from presenting problems that are not especially relevant and require a higher cost to
fix.

9. Explain the use of logic, the character of the presenter, and emotion as tools for persuasion.

Using logic, persuasion can be done. Logos is based on fact or reason. Typically, it is used to
define facts and figures that support the claims of the speaker and make people think they are rational
and reasonable. When this approach is by internal auditors, auditees can be persuaded by the strength
of the evidence.

It can also be achieved by appealing to the character of the presenter (ethos). It is an appeal to
the authority or reputation of the presenter. It is how well the presenter convinces the audience that
the presenter is capable of talking about a certain subject. This individual needs to be trustworthy,
truthful, and credible. Internal auditors must possess credibility as well because they carry out audit
procedures on which organizations depend.

Persuasion can also be achieved by pathos (emotion) by expressing feelings on a subject or

having an emotional response. This can be powerful if used well but in general, internal auditors least or
do not solely rely on pathos. It is effective if the aim is to interact or have a good relationship with the
auditees. This approach stresses that internal auditors should also build up the image of being friendly,
compassionate, and approachable (Murdock, 2016, p. 227).

10. Explain three tactics used to persuade, distract, and divert the attention of others. How should
operational auditors use this knowledge to prevent being manipulated themselves?

One of the tactics used to persuade, distract, and divert the attention of others is creating
information. It is done when individuals try to give a different view of the truth by excluding some
information or including information that should not be included. Repetition is another technique. By
constantly repeating the same thing, an individual hopes that it may eventually become true. Some do
this with untrue arguments. Also, another way to misrepresent the facts is to make unwarranted
generalizations that reflect one 's actions as that of the whole.

Operational auditors may use the knowledge on how to persuade, distract, and divert the
attention of others to prevent being manipulated by presenting information truthfully or with credibility.
Internal auditors should see to it that the findings to be communicated must be based on credible
evidence and records and should be made available to others for analysis. The data included in these
documents should be adequate and free from tampering to convince the reader. The facts and
documents should be used to help the organization, program or process enhance its operations, and
improve its ability to achieve its objectives (Murdock, 2016, pp. 228-229).
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