Auditing for the Three and Six Es

Question 1

Three Es

Answer 1

Effectiveness
Efficiency
Economy

Question 2

The ratio between what we planned to spend on each unit of resource of given quality, and what we actually spend.
The ratio between planned inputs and actual inputs in terms of unit costs of a given quality.

Answer 2

Economy

Question 3

Actual outputs correspond to the outputs we planned.
The ratio of actual outputs to planned outputs.

Answer 3

Effective

Question 4

It means “doing things well”. It is the ratio of actual inputs to actual outputs.

Answer 4

Efficiency

Question 5

Avoidance of discrimination and unfairness; acceptance and promotion of diversity

Answer 5

Equity

Question 6

Acting in an environmentally responsible way

Answer 6

Environment

Question 7

Legal and moral conduct by management and staff.

Answer 7

Ethics

Question 8

Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities. The internal audit collectively must posses or obtain the knowledge, skills, and other competencies needed to perform its responsibilities.

Answer 8

Proficiency

Question 9

What should the CAE do when ther is an inadequate balance between the technical complexity of the operation to be audited and the available, relevant technical competence of the in-house internal auditors?

Answer 9

1. Decline to include the operation within the future audit plan, or to approach the engagement with a limited scope.
2. Adjust the competencies of the internal audit function so that all the principal technical disciplines which are core to the operations of the business are represented within the audit team.
3. Buy-in temporarily the technical expertise to work alongside in-house internal auditors so as to build their competence to perform audits in particular technical areas.
4. rely to a greater or lesser extent, on a programme of control self assessment (CSA)

Question 10

Indicate the volume of output, whether services, products or other, and when linked to measures of input of resources, give useful information on quality or quantity matters.

Answer 10

Workload/Demand Performance Measures

Question 11

Examples of Workload/Demand Performance Measures

Answer 11

Number of users
Number of units produces
Number of books in a library
Percentage of first-class degrees in a university

Question 12

These may highlight waste in the provision of resources indicating that the same resources may be provided more cheaply or that more enterprise may be conducted
at the same cost.

Answer 12

Economy Performance Measures

Question 13

Examples of Economy Performance Measures

Answer 13

Cost of actual input in comparison with planned input
Cleaning costs per hours worked
Maintenance costs per unit area
Cost of the finance function per 100 staff
Cost of the chief executive’s department per 1000 clients.

Question 14

These may highlight potential opportunities to convert given resources to end products with less waste. Many performance measures will point to either uneconomic or inefficient practices, or both. It is often not possible to distinguish between one and the other.

Answer 14

Efficiency Performance Measures

Question 15

Examples of Efficiency Performance Measures

Answer 15

Ratio of actual input to actual output
Breakdown per production day
Accidents at work per 1000 personnel
Degree success in comparison to school examination grades

Question 16

These performance measures focus on how objectives are being achieved—regardless of economy, efficiency or equity (except where the objectives relate specifically to economy, efficiency and equity).

Answer 16

Effectiveness Performance Measures

Question 17

Examples of Effectiveness Performance Measures

Answer 17

Actual output in comparison to planned output
Degree success (in a college or university)
Research output per 100 research staff
Ratio of customer complaints to sales

Question 18

These performance measures draw attention to unfairness or potential social irresponsibility in term of corporate policy and practice.

Answer 18

Equity Performance Measures

Question 19

Examples of Equity Performance Measures

Answer 19

Departmental grant per member of staff
Number of library books per category of user
Proportion of female employees
Proportion of disabled employees

Question 20

It is provided by improving opportunities to achieve organizational objectives, identifying operational improvement, and/or reducing risk exposure through both assurance and consulting services.

Answer 20

Value as defined by the Institute of Internal Auditors

Question 21

It is when the organization and its stakeholders benefit from the results of internal audit work. Benefit arises when the internal activity provides objective and relevant assurance, and contributes to the effectiveness and efficiency of governance, risk management and control processes.

Answer 21

Add Value

Question 22

a comparison of one’s own performance in a specific area with that applied by others in compatible circumstances

Answer 22

Benchmarking

Question 23

The principal objectives of benchmarking:

Answer 23

• maintaining a competitive advantage in the appropriate market;
  *establishing current methods, best practice, and related trends;
  *ensuring the future survival of the organization;
  *maintaining an awareness of customer expectations
  *ensuring that the organization ahs the appropriate approach to quality issues.