Preliminary Survey Lectured by Dr. Siriluck Sutthachai Accounting Department Faculty of Management Science Khon Kaen University Khon Kaen, Thailand
Preliminary Survey ¡ Objectives survey of preliminary l Getting familiar with the departments l Understanding business environment l Knowing management styles l Initially testing the reliability of work flow
Preliminary Survey ¡ Why we have to do the preliminary survey l Scope audit program l Gaining background of nature of work that is going to be audited l Indicate strengths and weaknesses of business activities audited l Gather information for audit planning
Preliminary Survey ¡ Information sources o Permanent files o Observation o Current files o Work manual o Company policies, pronouncement and regulations o Budget and key performance indicators o Interviews and exchange opinions o Meeting minutes o Financial reports o Performance reports o Organization charts
Preliminary Survey ¡ Initial study ¡ Documenting ¡ Meeting ¡ Gathering information ¡ Observing ¡ Flowcharting ¡ Reporting
Initial Study ¡ The permanent file gives an overview of what the auditors can expect. ¡ Prior working papers can show other auditors approached the assignment. ¡ Existing literature on the subject provide auditors an insight information about the subject to be audited. ¡ Organisation charts and statements of authority and responsibilities show the authorities of each position.
Documenting ¡ Reminder list helps to plan what to do for each step of auditing. ¡ Table of Contents will help auditors to discipline their job. ¡ Cost reductions list helps to plan ahead some processes that can be reduced in order to decrease costs for a company.
Documenting ¡ Records of impressions check list will help to assess people working in the audited processes. ¡ Questionnaires can be produced after the initial study. This will help auditors to discuss with managers at the first meeting before get into more details for each audited process.
Meeting ¡ ¡ Arrangements—the time and place should be arranged. Interviews l Preparing—learn about the auditee before meeting. l Scheduling—phone the interviewee for the interviews. l Openning—tell the interview purpose and how the results will be used. l Conducting—communication skills are needed. l Closing—stop the interview when appropriate. l Recording—write or record the interview for later review.
Gathering Information ¡ Information to be gathered should be involved: l Planning e. g. copies of policies, directives and procedures. l Organizing e. g. organization charts and position description. l Directing e. g. operating instruction to employees and determine authority and responsibility l Controlling e. g. written standards and performance guides, review system and work flow. l General e. g. unbudgeting? Cumbersome organisational structure.
Observing ¡ Observation and inquiry can lead to l Determine objectives, goals, and standards. l Assess controls to achieve these aims. l Evaluate risk. l Identify controls to minimize risk. l Make statistical risk assessments. l Assess management style.
Flowcharting ¡ Flowchart shows how the processes work. ¡ It should be standardised in the auditing department. ¡ It helps to indicate critical point that may need to be addressed.
Reporting ¡ Survey report should contain both positive and negative findings. ¡ The report will help in preparing audit program. And auditors should suggest audit steps and the reason for them.
Reporting ¡ Survey reports should be produced and reported to: l Head of internal auditing department to examine important issues and problem areas and make a decision if further investigation is needed.
Reporting ¡ Survey reports should be produced and reported to: l Management informally in order to report some recommendations that can be addressed immediately and thus no further auditing.