Conducting the Examination Phase
Selecting Audit Procedures
The challenge in this phase of the audit process is to ensure that audit procedures are robust enough to enable the auditor to determine whether the audit criteria are met and to conclude on the audit objectives. Also, the auditor should be selecting audit procedures to increase audit impact. Each audit is unique and there is no substitute for professional judgment when making key decisions on audit procedures.
Table 7 includes examples of audit procedures that could be used to audit the efficiency of a regulatory inspection and enforcement function.Note that some procedures apply only to audits with a systems or results emphasis, while others apply to both categories.
Table 7 - Sample Audit Procedures for Auditing Efficiency of Regulatory Inspection and Enforcement Function
|
Audit Emphasis |
Audit Procedure |
Related Management Activity |
|---|---|---|
|
Systems or results |
Performance measures and targets Review reported results to determine if there are indications of inefficiency. Compare with benchmarks or standards. |
Performance monitoring and reporting |
|
Systems or results |
Data analysis and benchmarking
|
Commitment and tone from the top, operational planning, project and operations management, performance monitoring and reporting |
|
Systems |
Potential for automation or system improvements Perform walkthroughs of the system – The goal is to ensure that auditors understand the systems, interfaces, and manual processes. Are there indications that the systems need to be improved? Are there cost-effective improvements that should be made?
|
Project and operations management, information technology (IT) systems, continuous improvement and innovation |
|
Systems |
Verification processes for information on applications Obtain answers to the following questions:
|
Strategic planning, project and operations management, information technology (IT) systems, continuous improvement and innovation |
|
Systems or results |
Incomplete applications Determine the number or percentage of incomplete applications and the process to achieve completion. If possible, quantify the time and costs to deal with incomplete filings. Determine whether there is anything that should be done (such as clarifying instructions for applicants) to reduce the number of incomplete filings. |
Strategic planning, project and operations management, performance monitoring and reporting |
|
Systems |
Staff training Interview a sample of application-processing and licensing staff to determine approach to training. Review policies and training records. Is there indication of insufficient training or that training does not promote efficiency? |
Operational planning |
|
Systems |
File documentation Review sample of application and licensing files to determine whether policies and standards are followed. Is documentation well-organized and easily accessible? Are there feasible ways of making the documentation process more efficient (that is, using less costly options to maintain the same quality of output such as scanned documents as opposed to paper files)? |
Project and operations management, IT systems, continuous improvement and innovation |
|
Systems or results |
Administrative overhead Benchmark administration costs with those of similar application-processing and licensing functions. Administration costs could include administration staff, office space, and other components of overhead. Calculate the savings that would result if performance met benchmarks. |
Operational planning, project and operations management, performance monitoring and reporting |
|
Systems or results |
Potential innovations to increase efficiency Options Analysis – Conduct research on options, especially shared services, and discuss feasibility. If the government has public service centres, access centres, or similar one-stop shopping models for government services, determine whether the function being audited is included and, if not, why not. Process Automation – Conduct research to determine whether there are ways to automate processes – for example, electronic document submission, capture and storage; electronic application submission or auto-adjudication mechanisms for defined low-risk applicants. |
Performance monitoring and reporting, continuous improvement and innovation |
Considerations Relating to Reliance on Information Produced by the Auditee
During the examination phase, the question of whether it is appropriate to rely on information produced by an entity’s management systems will likely arise. This is especially true for audits that emphasize the results of the application process, or an entity’s performance monitoring and reporting systems.
In order to rely on information produced by an entity’s management, auditing standards require auditors to conduct sufficient, appropriate audit procedures to reduce the risk that information produced by management is incomplete or inaccurate. These audit procedures may include reviews of internal controls and systems, analytical procedures, and/or reliance on the work of other auditors or specialists. The requirement to audit management information systems and reports may consume significant audit resources. Auditors need to thoroughly plan and conduct procedures to support a conclusion that the risk of relying on the information produced by an entity’s management is low.
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