Preliminary Survey

Lectured by Dr. Siriluck SutthachaiAccounting Department

Faculty of Management ScienceKhon Kaen UniversityKhon Kaen, Thailand

Preliminary Survey Objectives of preliminary

surveyGetting familiar with the

departments

Understanding business environment

Knowing management styles

Initially testing the reliability of work flow

Preliminary Survey

Why we have to do the preliminary survey

Scope audit program

Gaining background of nature of work that is going to be audited

Indicate strengths and weaknesses of business activities audited

Gather information for audit planning

Preliminary Survey

Information sources

o Permanent files

o Current files

o Company policies, pronouncement and regulations

o Financial reports

o Performance reports

o Organization charts

o Observation

o Work manual

o Budget and key performance indicators

o Interviews and exchange opinions

o Meeting minutes

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 how 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 Preparing—learn about the auditee before meeting. Scheduling—phone the interviewee for the interviews. Openning—tell the interview purpose and how the results

will be used. Conducting—communication skills are needed. Closing—stop the interview when appropriate. Recording—write or record the interview for later review.

Gathering Information

Information to be gathered should be involved: Planning e.g. copies of policies, directives and

procedures. Organizing e.g. organization charts and position

description. Directing e.g. operating instruction to employees and

determine authority and responsibility Controlling e.g. written standards and performance

guides, review system and work flow. General e.g. unbudgeting? Cumbersome

organisational structure.

Observing

Observation and inquiry can lead to

Determine objectives, goals, and standards.

Assess controls to achieve these aims.

Evaluate risk.

Identify controls to minimize risk.

Make statistical risk assessments.

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:

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:

Management informally in order to report some recommendations that can be addressed immediately and thus no further auditing.

Case Study

Management Science Library

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