Append below explain what’s Operational Audit and Its Objectives:
Operational Audit:
- Operational audit is a systematic independent appraisal activity within an organization for the review of the entire department operations at the request of the management
- Is an extension of the traditional internal audit. Traditional audit looks only at accounting and financial operations but operational audit focus on operational areas like marketing, production, finance, etc
- Lindberg and Cohn have defined “operation auditing” as a technique for regularly and systematically appraising unit or function effectiveness against corporate and industry standards by utilizing personnel who are not specialists in the area of study with the objective of assuring a given management that its aims are being carried out and in identifying conditions capable of being improved.
Objectives Of Operational Audit:
- Primary objective is to assess the quality of operations and whether it is in line with the company’s prescribed polices/plans
- Operational audit also help to facilitates the granting of loan from lenders, facilitate insurance claims, facilitates the decision to invest, determination of purchase consideration of a business, discovery of errors and frauds,etc