Preliminary SurveyLectured by Dr. Siriluck SutthachaiAccounting DepartmentFaculty of Management ScienceKhon Kaen UniversityKhon Kaen, Thailand

Preliminary SurveyObjectives of preliminary surveyGetting familiar with the departmentsUnderstanding business environmentKnowing management stylesInitially testing the reliability of work flow

Preliminary SurveyWhy we have to do the preliminary surveyScope audit programGaining background of nature of work that is going to be auditedIndicate strengths and weaknesses of business activities auditedGather information for audit planning

Preliminary SurveyInformation sourcesPermanent filesCurrent filesCompany policies, pronouncement and regulationsFinancial reportsPerformance reportsOrganization chartsObservationWork manualBudget and key performance indicatorsInterviews and exchange opinionsMeeting minutes

Preliminary SurveyInitial studyDocumentingMeetingGathering informationObservingFlowchartingReporting

Initial StudyThe 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.

DocumentingReminder 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.

DocumentingRecords 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.

MeetingArrangementsthe time and place should be arranged.InterviewsPreparinglearn about the auditee before meeting.Schedulingphone the interviewee for the interviews.Openningtell the interview purpose and how the results will be used.Conductingcommunication skills are needed.Closingstop the interview when appropriate.Recordingwrite or record the interview for later review.

Gathering InformationInformation 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 responsibilityControlling e.g. written standards and performance guides, review system and work flow.General e.g. unbudgeting? Cumbersome organisational structure.

ObservingObservation 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.

FlowchartingFlowchart 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.

ReportingSurvey 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.

ReportingSurvey 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.

ReportingSurvey 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 StudyManagement Science Library

Table of contents will discipline auditors to 1) provide for certain matters that need to be dealt with as the job progesses; 2) establish working paper references.