NATIONAL UNIVERSITY OF CENTRAL PERU

GRADUATE SCHOOL

POSTGRADUATE UNIT OF THE FACULTY OF

ACCOUNTING

INDIVIDUAL WORK

AUDIT
MANAGEMENT

Presented by : GROUP 03

 Sonia Quispe Huaman

 Iris Guiliana Quintana Chimaico
 Santos Alejandro Espinoza Cortez
 Brian Rojas Romo
 Elda Elizabeth Armas Gaspar

teacher : Dr. CPCC. Demetrio Pedro Durand Saavedra

HUANCAYO – PERU

2021
 INTRODUCTION

Currently, both public and private organizations are exposed to different risks in their
management, which is why it is necessary to have tools such as management auditing to define
what the shortcomings are in aspects of efficiency, effectiveness and economy of business
management.

In the business world, the management audit contributes to the management of an organization
or company to achieve effective administration, discovering deficiencies and aspects that must
be improved to optimize profitability and business growth. In addition, in the economic
environment, this type of audit allows reflect the real level of management and the situation of
the company. In this sense, a literary review of both business management and management
auditing has been carried out.
 SUMMARY

Management audit is a tool that is used in organizations with the purpose of diagnosing,
controlling, verifying and establishing recommendations in all the processes that companies or
organizations carry out to achieve and fulfill their strategic objectives. One of the main reasons
why a company may decide to undertake a management audit is to establish control of all the
resources it has and that are being used in its processes. These resources require control in order
to avoid waste and deviations that are decreasing the profitability of the organizations, so based
on this information the organization could readjust the management system. This work aims to
describe some theoretical positions and different areas of application of management auditing as
an effective tool for organizations.

Likewise, management auditing is a relatively new advisory technique that helps analyze,
diagnose and establish recommendations for companies, in order to successfully achieve a
strategy. One of the main reasons why a company may decide to undertake a management audit
is the change that is essential to readjust its management or organization.

MANAGEMENT AUDIT
“A tool for continuous improvement”
1. Definition

AUDIT MANAGEMENT
It is the objective, systematic, professional It is a process through which the entity
and subsequent examination of financial, ensures the obtaining of resources and their
administrative and management operations, effective and efficient use in meeting its
carried out with the purpose of verifying and objectives. This fundamentally seeks the
evaluating them, in order to make pertinent survival and growth of the entity, is
observations and recommendations. developed within the framework determined
by the objectives and policies established by
a strategic plan and involves all levels of
responsibility of the entity.

The performance audit consists of an independent, objective and reliable examination of

whether initiatives, systems, operations, programs, activities or organizations operate in
accordance with the principles of economy (a), efficiency (b) and effectiveness (c),
and If there is room for improvement.

a) Principle of Economy : Prescribes that the means used by the audited entity to
carry out its activities will be made available in a timely manner, in the
appropriate quantity and quality and at the best price.
b) Principle of Efficiency : It refers to the optimal relationship between the means
used and the results obtained.

c) Principle of Effectiveness : It refers to the achievement of the specific

objectives set and the obtaining of the expected results.

Likewise, management auditing is a relatively new advisory technique that helps

analyze, diagnose and establish recommendations for companies, in order to
successfully achieve a strategy. One of the main reasons why a company may decide to
undertake a management audit is the change that is essential to readjust its management
or organization.

2. Characteristics of the Management Audit

 Permanent: means that they must be continuous over time, contributing in an effective
and timely manner to identifying, analyzing, evaluating, treating, communicating and
monitoring the provider's risks. The management and results audit -AEGR- must
immediately inform the competent control body of any situation that puts the
provision of the service at risk and that it detects in the development of its
management . Audits that are not carried out continuously, or in periods that do not
cover the annual period, are not considered permanent.

 Strategic . They focus on the aspects indicated in the resolution and on the other
critical or relevant aspects of the provider that are identified in the development of the
audit.

 Objectives . When developing them, it must be ensured that the findings and
conclusions are based, as far as possible, on verifiable evidence.
  Reliable . The information presented and reported by the audit must be truthful and
accurate, in a way that minimizes the risks of interpretation.

 Diligent . The requirements of the competent control body must be met, with diligence
and timeliness.

 Effective . The management and results audit must recommend in its conclusions the
corrective, preventive or improvement actions to be applied, with respect to the
situations detected.
3. Objectives of the Management Audit
 Evaluate the economy, efficiency and effectiveness of entities.
 Evaluate compliance with government policies
 Evaluate compliance with goals and results indicated in the programs, projects
or operations of the organizations subject to control.
 Analyze the cost of the activity and the correct use given to the approved
resources.

4. Benefits of the Management Audit

 It allows you to identify problem areas, related causes and solutions to improve.
 Locating opportunities to eliminate waste and inefficiencies is significant in
performance audits, however, one must beware of short-term cost reductions
causing long-term problems.
 Identify the criteria to measure the achievement of the organization's goals and
objectives.
 Enable an additional channel of communication between operating levels and
senior management
 Generally, personnel working in operations are more aware of problems and
causes than management personnel, so one of the advantages of the
performance audit is the ability of auditors to convey operational concerns to
management.
 Issue an independent and objective evaluation of operations

5. Scope of the Management Audit

The management audit may be of a specific function, a department or group of

departments, a division or group of divisions, or the company as a whole. Some audits
cover a combination of two or more areas.

For example, in the study of the order procedure received by the sales department, the
investigation can include in said department the various routines observed for the
processing or processing of stationery and in the accounting department, the procedure
and qualities of the personnel that approves the client's credit.

The field of study may encompass the economics of production, including elements
such as: specialization, simplification, standardization, diversification, expansion,
contraction and integration; It could also include the factors of production.
On the other hand, as in the examination areas among others, they could include a study
and evaluation of methods for forecasting:

 Product programming,
 Engineering project costs,
 Price estimation,
 Communications, equipment and
 Data processing applications,
 Administrative efficiency, among others.

The elements in the administration and operation methods that require constant
surveillance, analysis, and evaluation are the following: plans and objectives, organic
structure, policies and practices, systems and procedures, control methods, forms of
operation, and material and human resources. .

Pronouncement No. 7 of the Technical Council of Public Accounting already

mentioned, proposes the following as the main areas that make up an organization that
is the subject of the management audit:
 Audit of the Commercial system Audit of the Production system Audit of the Audit of the
management of the management audit: management of the management audit: management of the management of
company's global financial system: human resources administrative systems:
system system:

 Competitive  Business strategy  Working capital  System design  Productivity  Analysis of

position analysis  Investments  Production  Working projects and
assessment  Offer of goods and  Long-term scheduling environment programs
 Evaluation of the services financing  QA  Promotion and  Audit of data
organizational  Physical  Financial planning  Warehouse and incentive policies processing function
structure distribution system  International area. inventories  Selection and  Audit of
 Social Balance  Pricing policy  Technical and training policies administrative
 Evaluation of the  Advertising economic  Design of tasks procedures and
strategic function productivity and jobs. forms of internal
management  Sales function  Design and control in
process  Sale promotion. development of functional areas.
 Evaluation of products.
management
teams.
6. Management Audit Risks

a. Control Risk : It is one that exists and is caused by a lack of control of the company's
activities and can generate deficiencies in the internal control system.

b. Detection Risk : It is that which is assumed by the auditors that in their review they do
not detect deficiencies in the internal control system.

c. Inherent Risk : These are those that are inherent to the characteristics of the internal
control system.

7. Processes/Phases of the Management Audit

To carry out the management audit, it is important to follow the following phases that
comprise the management audit process that we will detail below:

7.1 Phase I: Preliminary knowledge.

Procedures applied to know the institution:

 Observation visit.
 Obtaining information.
 Information review.
 Definition of the scope and objectives of the audit.
 Identification of potential areas to be considered in the audit strategy.

Giving us the preliminary planning-diagnosis report as a result of the aforementioned

process.

The audit process begins with audit planning, the purpose of which is to develop an
overall strategy for its administration and conduct, as well as establishing an appropriate
focus on the nature, timing and scope of the audit procedures to be applied.

“Planning refers to the general guidelines that regulate the application of the
administrative audit to guarantee that the coverage of priority factors, sources of
information, preliminary investigation, audit project and preliminary diagnosis is
sufficient, pertinent and relevant” .

We can conclude that the purpose in this phase is to have a comprehensive knowledge
of the organization, updating our knowledge about the client, its economic and control
environment, that is, knowing its organizational and functional structure, the legal basis
of creation, the information systems available, management reports from management
to operational levels, all this information is necessary to compare with criteria, whether
 legal or technical.

7.2 PHASE II: PLANNING

Applied procedures:
 Analysis of information and documentation.
 Evaluation of internal control.
 Risk analysis and determination of the confidence level.
 Preparation of work programs.

Providing us as a result with the decision matrix by component culminating with the
work program.

This phase meets a fundamental objective, which is to design a tailored work strategy,
since its procedures are designed based on the degree of compliance with internal
control.

The review is oriented towards the established objectives for which the steps to be
followed in the present and subsequent phases and the activities to be developed must
be established.

The planning must contain the precision of the specific objectives and the scope of the
work to be carried out, considering, among other elements, the entity's management
parameters and indicators; The review must be based on detailed programs for the
determined components, the audit procedures, those responsible, and the date of
execution of the examination.

The determination of necessary resources both in number and quality of the work team
that will be used in the development of the review must also be foreseen, with special
emphasis on the estimated time budget and costs; finally, the expected audit results,
knowing the strengths and weaknesses and opportunities for improvement of the entity,
quantifying the expected savings and achievements as much as possible.

Strategic planning is part of the SWOT matrix and its name is derived from the initials:
strengths, opportunities, weaknesses and threats, threats being external opportunities
that shape the organization's environment, while strengths and weaknesses are
considered internal and have to do with the resources and capabilities of the
organization.
TABLE : MATRIX OF STRATEGIES

INTERNAL THREATS (A) OPPORTUNITIES

(O)
FACTORS
FACTORS
EXTERNAL
DA Strategies DO Strategy
WEAKNESSES (D)
Minimize (D)- Minimize Minimize (D) –Maximize
(A) (O)
FA Strategy FO Strategy
STRENGTHS (F)
Maximize (F) – Maximize (F)-Maximize
Minimize (A) (O)

7.3 PHASE III: EXECUTION

Applied procedures:
 Application of work programs.
 Obtaining evidence.
 Development of findings by component.
 Coordination and supervision.
 Definition of the report structure.
 Report writing.

With the application of the aforementioned procedure we will achieve documentation of

the execution which will allow us to control documents, current file records and data.

At that stage, is where the audit is actually carried out. The purpose of the execution
phase is to demonstrate the application of work programs designed to comply with the
 audit strategy to be followed. This supports the findings whose attributes are condition,
criterion, cause and effect. The quality in the development of these results is the
conformity with legal and technical criteria, thereby supporting the analysis carried out;
since the results obtained can be demonstrated in a sufficient, competent and relevant
manner, based on the audit criteria and procedures defined in each program, to support
the conclusions and recommendations of the reports.
In order to complement our analysis, let us review the following definitions:

A. THE FINDING

It refers to any relevant situation that is determined, through the application of

audit procedures, must be structured according to certain attributes (criterion,
condition, cause and effect) and, obviously, has to be of interest to the
organization. audited.

7.4 PHASE IV: COMMUNICATION OF RESULTS

This phase includes:

 Partial communication of results.
 Observations and opportunities for improvement are identified.
 Discussion with the client and definition of commitments.
 Obtaining as a result the executive report.
 Communication with related subjects is carried out throughout the entire audit process;
one of the purposes is to promote the taking of corrective actions immediately.

It is important that the audit report, before its issuance, be discussed in a final
conference with those responsible for the processes that were considered in the scope.

In addition to the partial reports that may be issued, such as that related to internal
control, a final report will be prepared, the same one that differs in the management
audit, since it will not only reveal the existing deficiencies as it did in the other audits,
but which will also contain the positive findings; but it is also different because in the
management audit report, in the part corresponding to the conclusions, the price of non-
compliance with its economic effect will be summarized, and the causes and conditions
for compliance with efficiency, effectiveness and economy. in the management and use
of resources of the audited entity.

7.5 PHASE V: FOLLOW-UP

This phase includes:

 Design.
 Implantation.
 Assessment.

Which will result in a recommendation implementation matrix, thus reaching the end of
the process.

As an annex to the audit report, the recommendations implementation matrix is

integrated, a document that is basic for this phase. Subsequently and as a consequence
of the management audit carried out, the internal auditors and, in their absence, the
auditors who carried out the audit must carry out the corresponding follow-up.
8. Management Audit Indicators

8.1 Definition

“The indicator is defined as the numerical reference generated from one or several
variables, which shows aspects of the performance of the audited unit. This reference,
when compared with a standard value, internal or external to the organization, may
indicate possible deviations with respect to which the administration must take
action.”

8.2 Goals

It could be said that the objective of management indicators is to provide the company
with a correct path so that it can meet the established goals.
Every management indicator must satisfy the following objectives:

 Communicate the strategy.

 Communicate goals.
 Identify problems and opportunities.
 Diagnose problems.
 Understand processes.
 Define responsibilities.
 Improve company control.
 Identify initiatives and necessary actions.
 Measure behaviors.
 Integrate compensation with performance.

The reason for a system of management indicators is to communicate, understand,

guide and compensate for the execution of the company's strategies, actions and
results.
The processes that commonly make up a management indicator system are: planning,
budget, information, monitoring, evaluation and compensation.

8.3 Characteristics

For indicators to be effective, they must have the following characteristics:

 Be relevant or useful for decision making.

 Feasible to measure.
 Easily convey information from one part to another.
  Be highly discriminative.
 Verifiable.
 Free of statistical or personal risk.
 Accepted by the organization.
 Justifiable in relation to its cost – benefit.
 Easy to interpret.
 Usable with other indicators.
 Have mathematical precision in quantitative indicators.
 Conceptual precision in qualitative indicators.

8.4 Parameters

EFFICIENCY EFFECTIVENESS ECONOMY

It is the relationship between the It is the relationship of services It is the timely use of suitable
resources consumed and the and products, the programmed resources in the correct quantity
production of goods and services, objectives and goals. and quality at the expected time,
it is expressed as a percentage Effectiveness is the degree to in the indicated place, that is,
comparing the input-production which an activity or program acquisition or production at the
relationship of goods and achieves its intended objectives lowest possible cost, in relation
services, it is expressed as an or goals. They are the results that to the organization's programs.
acceptable standard or norm; provide the desired effects
Efficiency increases to the extent
that a greater number of units are
produced using a given amount of
input. Its degree is given by the
relationship between the goods
acquired or produced or services
provided, with the management
of human, economic and
technological resources to obtain
them.

They intervene: They intervene: They intervene:

 Costs incurred.  Compliance with plans  Different economic

and programs. agents.
 Resource
management.  Results obtained.  Cost/benefit analysis.

 Status of the entity.  Planning quality.  Resources used.

 Inflation effects.  Opportunity and

coverage.

 Internal and external

aspects.
8.5 Classification of Indicators
Management indicators are classified as follows:

Globales,
Cualitativos y De uso
funcionales y
cuantitativos universal
especificos

8.5.1 Qualitative and quantitative

The indicators from the point of view of management instruments are of two
types:

Quantitative indicators Qualitative indicators

which are the values and figures that that allow taking into account the
are periodically established from the heterogeneity, threats and
results of operations, are a basic opportunities of the organizational
instrument. environment; It also allows
evaluating, with a strategic planning
approach, the management capacity
of management and more levels of
the organization.

8.5.2 Universal use

Management indicators universally known and used to measure efficiency,

effectiveness, goals, objectives and in general compliance with the
institutional mission.
8.5.3 Global, functional and specific

To adequately evaluate the management of the whole (public sector),

globally, and of each of the components called "Public Entities" it is
necessary, previously, to define or formulate with respect to each of them,
the mission, the objectives that will guide their actions and establish their
own productivity and management goals. This is possible through global,
functional or particular and specific indicators.

Global indicators Functional Specific indicators

indicators
They are those that In this type of They refer to the same
measure the results at parameters, the aspects already
the institutional level complexity and indicated regarding
and the quality of the variety of the the global indicators,
service provided to the functions carried however, to
different users. out in public differences from
Generally these entities must be these, which, as we
indicators measure taken into account. have said, refer to the
 quantitative aspects,Therefore, each whole in terms of
both monetary and non- function or activity country, Ministry or
monetary. must be measured Institution; Specific
Example: according to its indicators refer to a
o *Degree of compliance own characteristics, specific function, or a
of programs and also considering particular area or
projects in relation to what entity it is. process. Example:
what was scheduled. However, the same training programs
global indicators executed / programs
o *Budget execution must be adapted to budgeted
related to the assigned specific functions
budget. or activities.

9. Management Audit Tools

9.1 Internal control
9.1.1 Definition
It is the set of principles, foundations, rules, actions, mechanisms,
instruments and procedures that, ordered, related to each other and united to
the people who make up an organization, constitute a means to achieve
compliance with its administrative function, its objectives and the purpose it
pursues.”
The COSO report of the Committee of Sponsoring Organizations of the
Treadway Commission on internal control, published in the United States in
1992, of the English version, for which a report of the report was
commissioned to Coopers & Lybrand, presents the following definition:
Internal control is a process carried out by the board of directors,
management and other personnel of an entity, designed with the objective of
providing a reasonable degree of assurance regarding the achievement of
objectives within the following categories:

Eficacia y Fiabilidad de la Cumplimiento de

eficiencia de las información las leyes y normas
operaciones. financiera. aplicables

The internal control structure of an entity consists of the policies and

procedures established to provide reasonable assurance of being able to
achieve the specific objectives of the entity, relevant and of interest to the
performance audit, such as:
 Safeguard the assets, securities, properties and other assets of the entity.
 Promote staff efficiency, minimize human errors and detect.
 Quickly those that occur.
 Make the commission of irregular acts difficult and facilitate their
discovery if they occur.
  Guarantee the reasonableness of accounting and administrative
information in general.
The internal control of public entities and organizations operate or function
with different levels of effectiveness, but when they reach the standard they
can be classified as an effective system. This requires that senior management
have reasonable assurance of the following:
 That they have timely and adequate information on the fulfillment of
operational objectives.
 That reliable and complete operational management reports are prepared
in a timely manner.
 That the constitutional, legal and secondary norms are met.

9.1.2 Internal Control Methods

Various methods are used to evaluate internal control, among the best
known the following:

9.1.2.1 Questionnaire

It consists of designing questionnaires based on questions that must be

answered by the officials and responsible personnel, from the different
areas of the company under examination, in the interviews that are
expressly held for this purpose.
The questions are formulated in such a way that the answer is:
 Affirmative = Optimum point in the internal control structure
 Negative = Weakness and a not very reliable appearance;
Some questions are probably not applicable, in which case the letters
NA “not applicable” are used. If necessary, in addition to providing the
answers, you can complete them with additional explanations in the
observations column of the questionnaire or on additional sheets.

9.1.2.2 Flowcharts

It consists of objectively surveying and describing the organic structure of

the areas related to the audit, as well as the procedures through its different
departments and activities.
This method is more technical and remediable for evaluation, it has an
advantage over other methods because it allows the survey to be carried out
following a logical and orderly sequence, it allows the circuit as a whole to
be seen at a glance and facilitates the identification or absence of controls. .
To prepare, you must follow the following steps:
1. Determine the symbology.
2. Design the flowchart.
3. Explain each process next to the flow or on additional sheets.

SYMBOLOGY USED IN THE PREPARATION OF DIAGRAMS

 DECISION  This symbol is used when the

operation is within certain alternatives.
 The consecutive numbering must be
written as if it were just another
operation.
 To achieve uniformity in the flow, on
the right side there must be (NO) at the
bottom of alternative (YES) (it may
vary depending on the flow direction).

 ARCHIVE  It is used to represent the storage of

information under various situations:
Temporary “T”, Permanent “P” or
Destruction “X”.

 Numbers or letters are written inside

the symbol; the letters that indicate the
status of the file.

 TIME FREQUENCY
 It represents a time condition for the
execution of operations, usually
reflecting days, months, years.

 Within the symbol the time must be

specified: 15 days, 2 months, etc.

 TIME FREQUENCY
 It represents the relationship of
information of a process between
subsystems or systems.

 At the top the system is indicated, in

the registry.
  DOCUMENT
 It is used to identify any type of
document originated or received in the
system.

 The symbol identifies the name of the

document.

 The number of copies of each

document should be graphed.

 RECORD  It represents a document that contains

inputs and outputs of operations, they
are books.

 Auxiliary or main carried by hand or

some magnetic or electronic means.

 The registration is indicated within the

symbol.

 The symbol must appear in a separate

column on the flow sheet.

 It is convenient to diagram the record

using dotted lines.

Descriptive or narrative
It consists of a detailed description of the most important procedures and
characteristics of the system being evaluated; These explanations refer to
functions, procedures, records, forms, files, employees and departments
involved in the system. The survey is done in interviews and observations of
activities, documents and records.

Arrays
The use of matrices carries the benefit of allowing better location of internal
control weaknesses. To prepare it, the following prior procedures must be
carried out:
 Complete a questionnaire segregated by basic areas, indicating the name of
 the officials and employees and the type of functions they perform.
 Collateral evaluation of internal control.

Sufficient and competent evidence

Audit evidence constitutes the elements of proof that the auditor obtains about
the facts he examines and when these are sufficient and competent, they support
the examination and support the content of the report.
The auditor dedicates most of his work to obtaining or preparing evidence,
which he achieves through the application of audit techniques.

Items
For it to be audit evidence, the union of two elements is required:
Sufficient evidence (quantitative characteristic) and competent evidence
(qualitative characteristic) provide the auditor with the necessary conviction to
have an objective basis in his examination.
a) Sufficient evidence : When this is in the quantity and types of evidence,
that it is useful and obtained within reasonable time and cost limits.
b) Component evidence : When, according to its quality, it is valid and
relevant.

Types of evidence

Physical: Obtained through direct

inspection and observation of activities,
documents and records

Testimonial: Which is obtained in

interviews whose answers are verbal
and written, in order to verify the
authenticity of a fact.

Documentary: These are documents

obtained from an external source or
outside the entity.
 Analytics: It is the result of
computing, comparisons with legal
provisions, reasoning and analysis.

9.2 Audit Techniques

In the management audit, the auditor's professional judgment is essential for

determining the use and combination of the most appropriate techniques and practices,
which allow him to obtain sufficient, competent and relevant evidence, which gives
him an objective and professional basis. , which substantiate and support their
comments, conclusions and recommendations. It is considered important below to
define the techniques and practices that can be most used in this type of audits.

AUDIT TECHNIQUES

check Techniq
ues
a) Comparison
Ocular b) Observation
c) Tracking
a) Inquiry
Verbal b) Interview
c) Survey
a) Analysis
b) Conciliation
Written
c) Confirmation
d) Tabulation
a) Verification
Documentary film b) Calculation
c) Selective review

Physical a) Inspection
 Comparison: It is the determination of the similarity or differences existing in two
or more facts or operations; Through this technique, the operations carried out by
the audited entity, or the results of the audit, are compared with normative,
technical criteria and established practices, through which a report can be evaluated
and issued in this regard. Phases: 3 execution and 4 communication of results.

 Observation: It is the visual verification carried out by the auditor during the
execution of an activity or process to examine physical aspects, including
observation of the workflow, documents, materials, etc. Phases: 1 preliminary
knowledge, 2 planning and 3 execution.

 Tracking: It is the monitoring and control of an operation, within a process or

from one process to another, in order to know and evaluate its execution. Phases: 1
preliminary knowledge and 3 execution.

 Inquiry: It is the obtaining of verbal information through inquiries or direct

conversations with officials of the audited entity or third parties about the
operations that are related, especially undocumented facts or aspects. Phases: 1
preliminary knowledge and 3 execution.

 Interview: Interviews with officials of the audited entity and third parties in order
to obtain information, which then requires confirmation and documentation.
Phases: 1 preliminary knowledge and 3 execution.

 Survey: Surveys carried out directly or by mail, with the purpose of receiving from
officials of the audited entity or third parties, information on a universe, through
the use of questionnaires whose results must subsequently be tabulated. Phase: 3
execution.

 Analysis: It consists of the separation and critical, objective and thorough

evaluation of the elements or parts that make up an operation, activity, transaction
or process, with the purpose of establishing its ownership and compliance with
regulatory and technical criteria; such as, for example, the analysis of the entity's
internal and external documentation until a logical deduction is reached; It involves
the separation of the various parts and determines the immediate or potential effect.
Phases: 1 preliminary knowledge, 2 planning, 3 execution and 5 monitoring.

 Reconciliation: It consists of making two related, separate and independent sets of

data agree; For example, analyzing the information produced by the different
 operational or administrative units, in order to make them consistent with each
other and at the same time determine the validity and veracity of the records,
reports and results under examination. Phase: 3 execution.

 Confirmation: Independent and written communication, from the officials who

participate or execute the operations, and/or from a source outside the audited
entity, to verify the authenticity of the records and documents subject to the
examination, as well as to determine the accuracy or validity of a figure, fact or
operation. Phase: 3 execution

 Tabulation: It consists of grouping important results obtained in area, segments or

elements examined that allow conclusions to be reached. Phase: 3 execution.

 Verification: It consists of verifying the existence, legality, authenticity and

legitimacy of the operations carried out by an entity, through the examination of
supporting or supporting documentation. Phases: 1 preliminary knowledge and 3
execution.

 Calculation: It consists of verifying the accuracy and arithmetic correctness of an

operation or result, presented in reports, contracts, vouchers and others. Phase: 3
execution.

 Selective review: Consists of a brief or quick review or examination of a part of

the universe of data or operations, with the purpose of separating and analyzing
aspects that are not normal and that require special attention and evaluation during
the execution of the audit. . Phases: 1 preliminary knowledge and 3 execution.

 Inspection: Technique involves the physical and ocular examination of assets,

works, documents, securities and others, in order to establish their existence and
authenticity; At the time of application, it requires the combination of other
techniques, such as: inquiry, observation, comparison, tracking, analysis, tabulation
and verification. Phase: 3 execution. In addition to the techniques indicated, others
are known in management auditing, such as the following:

 Verification: It is associated with the audit process, it ensures that things are as
they should be, operations from the period being audited and others from
subsequent periods could be verified. Phases: 2 planning and 3 execution.

 Research: Examines actions, conditions and accumulations and processing of

assets and liabilities, and all operations related to them. Phases: 1 preliminary
 knowledge, 2 planning, 3 execution and 5 monitoring.

 Evaluation: It is the process of reaching an audit conclusion based on the available

evidence. Phases: in all, especially in Phase 4 communication of results. In the
management audit, certain practices can also be applied, such as those defined
below:

 Symptoms: They are signs of something that is happening or is going to happen,

which warn the auditor of the existence of a critical area or problem and which
guide him to emphasize the examination of certain items, areas or operations, to
define the techniques to be used and obtain the required evidence. Phases: 1
preliminary knowledge, 2 planning and 3 execution.

 Intuition: It is the capacity for rapid response or reaction manifested by

experienced auditors, in the presence of certain symptoms that lead one to think
about the possibility of a finding. Phases: 1 preliminary knowledge and 3
execution.

 Suspicion: It is the action of distrusting information that for some reason or

circumstance is not given sufficient credit; Suspicion requires the auditor to
validate said information and obtain supporting documentation. Phases: 1
preliminary knowledge and 3 execution.

Synthesis: Summarized preparation of facts, operations or documents of a legal,

technical, financial, administrative or other nature. Phases: 1 preliminary
knowledge and 3 execution.

Statistical sampling: It is the application of audit procedures to a proportion of

less than one hundred percent of the operations of an entity, project, program or
activity, with the purpose of evaluating the characteristics and inferring its
universe. Phase: 3 execution.

9.3 Audit Marks

Audit marks, also known as audit keys or accents, are particular and distinctive signs
that the auditor makes to indicate the type of work performed so that the scope of the
work is perfectly established. These marks also allow us to know which items were
subject to the application of the audit procedures and which were not.
There are two types of marks, those of uniform meaning, which are frequently used in
any audit. The other marks, whose content is at the discretion of the auditor, obviously
do not have a uniform meaning and their understanding requires that a legend of its
meaning be attached to the symbol.
The marks, as well as the indexes and references already indicated, should preferably
be written with a red pencil, since its use is widespread, just as the work papers
prepared by the auditor are usually made with a paper pencil. The standard brands are
the following:

SYMBOLOGY OF AUDIT MARKS

9.4 Work papers

Working papers are defined as the set of records and

documents prepared or obtained by the government
auditor, the product of the application of audit
techniques, procedures and practices, which serve as
evidence of the work performed and the audit results.
revealed in the report.
Therefore, they constitute the records and documents maintained by the auditor of the
procedures he followed, the partial verifications he carried out, the verification
obtained and the conclusions he reached in relation to his examination; They may
include: work programs, analysis, annotations, documents from the entity or third
parties, confirmation letters and statements from the client, extracts from documents
from the institution and spreadsheets or comments prepared or obtained by the auditor.
The main purposes of working papers are:
 Constitute the basis that the auditor has to prepare the audit report.
 Serve as a source to verify and explain in detail the comments, conclusions
and recommendations set out in the audit report.
 Build documentary evidence of the work carried out and the decisions made,
all in accordance with the NAGAS.

Every work paper must meet certain characteristics, such as the following:
 Prepare clearly and precisely, using logical references and a minimum number
of marks.

 Its content will include only data required by the auditor's professional
judgment.

 They must be prepared without amendments, ensuring the permanence of the

 information.

 Appropriate measures will be adopted to guarantee its custody and

confidentiality, disclosing the responsibilities that could arise due to the
deviations presented.
The main objectives of the working papers are the following:
 Support the content of the report prepared by the auditor.
 Comply with auditing standards issued by the Comptroller General's Office.

The secondary objectives are:

 Support the development of the auditor's work. The auditor will execute
various tasks personally or with the help of his operatives, which require a
certain sequence and order to comply with professional standards.

 Accumulate evidence, both from the audit procedures applied and from the
selected samples, that allow the auditor to form an opinion on the financial-
administrative management of the entity.

 Facilitate supervision and allow the work performed to be reviewed by a third

party.

 Constitute an important element for the scheduling of subsequent

examinations of the same or similar entity.

 Inform the entity about the deficiencies observed, about aspects related to
systems control activities, accounting procedures, among others.

 They serve as a defense in possible litigation or charges against the auditor.

The working papers, prepared with professionalism, serve as evidence of the
auditor's work, enabling their use as elements of judgment in actions against
him.

The working papers are the property of the audit units of the Comptroller's Office and
public entities, which have the responsibility of custody in an active file for a period of
five years and in a passive file for up to twenty-five years. They can only be exhibited
and delivered upon judicial request.

These work papers must be organized and filed in a systematized manner, either by
preparing files, folders or files that are of two types:

a) Permanent or continuous file: This permanent file contains information of interest or

 useful for more than one audit or necessary for subsequent audits.
The first page of this file must necessarily be the index, the same one that indicates the
content of the file.
The purpose of the permanent archive can be summarized in the following points:
 Remind the auditor of operations, activities or events that are valid over a
period of several years.

 Provide new auditors with a source of information on the audits carried out.

 Keep working papers that will be used for several years and that do not need
to be prepared year after year, since no changes have occurred.
Most of the information is obtained in the first audit, but as indicated, its use is in this
and future audits. It is necessary that your information be updated in each audit.

b) Running File: Working papers related to the specific audit for a period are stored in
these running files. The number of files or folders that are part of this file for a given
period varies from one audit to another and even in the case of the same audited entity.
This file is in turn divided into two files or folders, one with general information and
the other with specific documentation by component.

10. Relationship between the Management Audit and the Financial/Compliance Audit

Aspects Audit Financial/Compliance

Management Audit
Object Evaluate whether Evaluate whether financial
community funds have operations have been
been used economically, executed legally and
efficiently and effectively regularly and whether the
accounts are reliable.
Area of application Policies, programs, Financial operations,
organizations, activities accounting and key
and management systems. control procedures.
Academic base Economics, Political Accounting and Law.
Science, Sociology, etc.
Methods They vary depending on Standard format
each inspection.
Inspection criteria Greater freedom of Less freedom of judgment
judgment for the auditor. for the auditor.
A unique criterion for Standardized criteria
each audit. established by legislation
and regulations applicable
to all audits.
Reports Publication of special ad Annual report. More or
hoc reports. Variable less standardized.
structure and content
depending on the
objectives.
 CONCLUSIONS

From all of the above and through the empirical analysis carried out, we can extract the
following particular conclusions about the management audit:

 Improves and rationalizes the company's administrative management systems. -

Improves transparency and, consequently, information.
 It allows you to clarify the organizational structure of the company.

 Supports the motivation of human resources in the organization.

 Optimizes management and provides information in decision making.

 Improves control by simplifying the feedback process.

Furthermore, we must note that while the financial audit is legislated and the opinions are
standardized, in the management audit, the lack of audit principles means that the opinions
reflect more the idiosyncrasy of the auditor, which requires maximum objectivity on the
part of the auditor. this. Finally, the management audit constitutes a tool when formulating
and implementing strategies that allow us to achieve the company's mission.
 BIBLIOGRAPHY

 Ruiz, Y. Management Audit applied to the processes of the Human

Resources Area, purchases and sales. Ecuador; 2013

 Sevillano, A. Human Talent Management Audit Model of the Superior

Court of Justice Ibarra . Ecuador; 2011

 Robalino, A. Management Audit of the Sales and Customer Service

Department. Ecuador ; 2011

 George R.; Principles of Management Audit; 2011

 Michel J.; Management Systems Audit Manual ; 2010

 Carrera M, Loor R; Quality Management Audit. Ecuador ; 2010

 Consulting Advisors; Management Audit ; Peru; 2010

 Arturo K, Human Resources Administration , Lima, 2010

 Richard V; Audit Risk Assessment ; Lime; 2009

 University EAFIT; Rules of Audit Generally

Accepted; Arequipa; 2008

 Guillermo C. General Theory of Audit and Fiscal Review ; Bogota; 2008

 Henry B; Administrative Audit Strategic change management; 2007

 Rodrigo EstupiñanGaitan; Analysis of Coso Report I and II ; Bogota; 2006

 Whittington R, Pany K. Principles of Auditing ;Mexico DF; 2005