Engagement Tools

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Flowcharting - diagrammatic method of
analyzing and understanding the processes and
procedures involved in operations, whether
manual or computerized.
it is applied in the preliminary survey and in
obtaining an understanding of internal control
It is also useful in system development
Different systems of symbols have been devised
thus IA activitys usage should be consistent.
Internal auditors also should coordinate their
methods with those of the external auditors

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Flowcharts may be horizontal or vertical
a. Horizontal
sometimes called systems flowcharts
Depict areas of responsibility
(departments/functions) arranged horizontally
across the page in vertical columns or areas
b. Vertical
present successive steps in a top-to-bottom format

Horizontal Flowchart Symbols

VERTICAL FLOWCHART SYMBOLS

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Flowcharts may be employed as a tool for
developing information systems
a. Systems flowchart can document not only
manual processes but also the physical design
specifications for the entire systems, including
all input, output, processing steps, important
files, and documents
b. Program flowcharts depicts the specific steps
within a program and the order in which they
will be executed.

SYSTEMS FLOWCHARTS

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Flowcharts may be employed as a tool for
developing information systems
c. Data flow diagrams employed in structured
systems analysis, a top-down methodology that
divides a system into levels of modules and
specifies what processes occur in each module
and the connections between the module.
It is a graphic illustrations of a systems processes
and data flows using four basic symbols.

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Flowcharts may be employed as a tool for
developing information systems
c. Document flowchart graphically presents the
flow of forms through a system that relate to a
given transactions
It shows the source, flow, processing and final
disposition of various copies of all related
documents
d. Control flowchart graphical means of representing
the sequencing of activities and information flows, with
related control points

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Process Mapping Graphs
Auditors should be able to
Use graphical methods for planning and controlling
the audit
Interpret graphic depictions of data when gathering
evidence
Produce graphic analyses for documentation and
reporting purposes

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Process Mapping Graphs
Program Evaluation and Review Technique (PERT)
Critical Path Method (CPM)
Similar techniques that use network diagrams to
plan and control complex projects such as internal
audits, in which the proper sequencing of activities
is crucial.

PERT

CPM

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Process Mapping Graphs
Gantt chart simpler project control device
It does not depict the interrelationship of
activities and omits calculations of activity times
and costs
It displays the degree of completion of each
activity.

GANTT CHART

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Process Mapping Graphs
Gantt chart simpler project control device
It does not depict the interrelationship of
activities and omits calculations of activity times
and costs
It displays the degree of completion of each
activity.

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Process Mapping Graphs
Scatter diagram
It permits the auditors to identify misstated data,
relationships among variables, and unusual
operating results
When the points have a systematic relationship, the
independent (x) variable and dependent (y) variable
are likely to be correlated thus, the value of one
variable is a predictor of the value of the other.

SCATTER DIAGRAM

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Process Mapping Graphs
Cause and effect diagram (Fishbone
diagram/Ishikawa diagram)
provides a problem solving techniques that
assists the internal auditors in systematically
searching for the causes of adverse conditions

Fishbone diagram/Ishikawa diagram

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Process Mapping Graphs
Bar charts
two dimensional graphic means of quantitative
comparison
They use bars or rectangles with lengths
proportional to the measure of the data or
things being compared
It may be vertical or horizontal

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Process Mapping Graphs
Bar charts
a. Pareto diagrams- bar charts in which the
frequencies of the various types of adverse
conditions that may occur in a given process
The tallest (longest) bar signifies the most
common type of problem

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Process Mapping Graphs
Bar charts
b. Histogram- bar chart used to depict a
frequency distribution
It is used to create a graphic representation of the
results of repeated measurements.

HISTOGRAM

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Interview is a means of obtaining testimonial
evidence from engagement clients, other
members of the organization who have contact
with them and independent parties
An interview allows auditor to ask questions clarifying
initial testimony
Auditors may deepen their understanding of operations
and seek reasons for unexpected results and unusual
events and circumstances
Is a secure and personal form of communications
compared with email or paper-based documents.

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Interview
One fundamental human relations problem faced by the
internal auditor interviewer is that people dislike being
evaluated
Engagement clients may resent even the most constructive
criticism and fear the possibly adverse consequences of an
audit report
The auditor must gain the confidence of clients by
demonstrating self assurance, persuasiveness, fairness,
empathy, and competence
The auditor may be able to gain the clients willing
cooperation by explaining how the engagement may be
helpful to them.
The auditor must avoid the pitfall of over-criticism
o The auditor may resort to excessive criticism of minor matters

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Interview
Effective planning of an interview involves
Preparing by reading operations manual,
organization charts, prior engagement
communications, results of questionnaire
o The auditor should also understand the psychological
traits of auditee managers

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Interview
The interviewer should be tactful, objective,
reasonable, and interested
The auditor must avoid accusatory tone and avoid
statements not yet supported by evidence
The interviewer should not react adversely to the
hostility of the interviewee
The auditor should carefully explain the situation
and provide an opportunity for the interviewee to
calm down and continue the interview.

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Interview
Active (effective) listening includes
Observing interviewee behavior (body language such as
eye contact)
Reserving judgment about what is said
Asking clarifying questions
The auditor should send appropriate nonverbal signals
and should stop other activities and focus complete
attention on the speaker.
Reflecting what is said, that is summarizing or
rephrasing an answer is a means of stimulating
additional comments
The interviewee should be encouraged to ask relevant
questions. These questions should be heard respectfully

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Interview
Active (effective) listening includes
Empathy is a sensitive awareness of the speakers
feelings, thoughts and experience
o An emphatic listener understands what the speaker
wants to communicate rather than what the listeners
wants to understand
Listening with intensity involves concentrating on the
speakers message and disregarding distractions
Attentiveness is promoted by use of active listening
techniques
Anticipation is one approach the interviewer can use to
maintain focus during a far-ranging discussion

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Interview
Leading questions (questions suggesting the
answers) should be avoided
Loaded questions (questions with selfincriminating answers) also should be avoided.
Questions requiring and explanatory response
are usually preferable to those of the yes/no
variety.
Care should be taken to differentiate statements
of fact from statement of opinion

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Interview
The interview should be recorded
a. Good note taking during the interview is essential
Notes should be sufficiently readable and thorough to
permit a full reconstruction of the information gathered
This write-up should occur as soon as possible after the
interview
The interviewee should be performed about the need for
note taking
Notes should be properly dated and labeled, and the
names and positions of interviewees should be included
The amount of time spent not looking at the interviewee
should be minimized, and questions should not be asked
while jotting notes

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Interview
The interview should be recorded
b. The notes and the memorandum prepared with
their help are part of the working papers and
therefore the documentation of the engagement
used to prepare communications
The memorandum should included significant
events during the interview, such as interruptions or
emotional outburst
The internal auditor must be careful to use the
information in its proper context

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Interview
The interview tend to be of four types:
a. Preliminary interview
promote the value of internal auditing
Understand the interviewee
Gather general information
Serve as a basis for planning future interview strategies
b. Fact-gathering interview
oriented to the specific details that can be provided by a
particular interviewee
Elaboration can be sought in a nondirective manner

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Interview
The interview tend to be of four types:
c. Follow-up interview
Intended to answer questions raised during the analysis of the factgathering interview
It also tests the interviewees acceptance of new ideas generated
by the auditor

d. Exit interview
helps to ensure the accuracy of conclusions, findings, and
recommendations in the final engagement communication
by discussing it with the interviewee.

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Other Data-Gathering Techniques
1. Questionnaires- are an efficient way of
preparing for an interview
Formal questionnaires may be sent to the
client prior to the auditors visit
Provides an opportunity for engagement
client self-evaluation
One use is to obtain an understanding of
clients control

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Other Data-Gathering Techniques
1. Questionnaires An internal control questionnaire is often very
structured and detailed and is drafted in a yes/no or
short answer format
Disadvantage of these questionnaires are that
o They are difficult to prepare
o They are time-consuming to administer
o Engagement clients may be able to anticipate the preferred
responses and therefore may not be truthful or give sufficient
consideration to the task
o All circumstances cannot be addressed
o They are less effective than interviewing

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Other Data-Gathering Techniques
2. Checklist
increase the uniformity of data acquisition
They ensure that a standard approach is taken and
minimize the possibility of omitting consideration of
factors that can be anticipated
Disadvantage of checklist include:
o Providing a false of security that all relevant factors are
addressed
o Inappropriately implying equal weight to each item on the
checklist
o The difficulty of translating the observation represented by
each item on the checklist

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Other Data-Gathering Techniques
3. Other data sources
Surveys
o Mail questionnaires relatively low in cost, eliminate
interviewer bias, and gather large amount of data
Inflexible
Slow response time
Prone to nonresponse bias
o

Telephone interviews flexible means of obtaining data rapidly and

controlling the sample
Introduce interviewer bias
More costly
Gather less data than mail surveys

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Other Data-Gathering Techniques
3. Other data sources
Rating scales
o Used to allow people to rate things such as service
o The scale represents a continuum of responses

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Problem solving defined as conscious process of
bringing the actual situation closer to the desired
situation
Problem-solving process four steps
a. Defining the problem
b. Formulating solutions
c. Choosing a solution
d. Implementing solution

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Problem solving
Techniques in formulating solutions
a. Brainstorming unstructured approach that relies on
spontaneous contribution of ideas from all members
of a group
b. Synectics highly structured group approach to
problem statement and solution based on creative
thinking
free use of analogies and metaphors in informal exchanges
within selected small group of diverse personality and areas
of specialization

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Problem solving
Techniques in formulating solutions
c. Delphi techniques approach in which the manager
solicits opinions on a problem from experts, summarizes
the opinions, and feeds the summaries back to the
experts.
d. Value analysis methodical approach primarily
designed to optimize performance of an activity at a
minimum cost
e. Free association approach to idea generation that
reports the first thought to come to mind in response to a
given stimulus

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Problem solving
Techniques in formulating solutions
f. Forced relationship structured adaptation of free
association
The elements of a problem are analyzed and the
associations among them are identified so as to detect
patterns that may suggest new ideas
g. Blast then refine US navy problem-solving methodology. It
completely disregards any existing approach
An entirely new problem solution is then sought that will attain the
original objectives
h. The Edisonian approach trial and error experimental method

inspired by famous inventor Thomas Edison

It should usually not be applied unless other approaches have been

unsuccessful

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Problem solving
Techniques in formulating solutions
i. Morphological matrix analysis structured technique that
plots decision variables along the axes of a matrix
j. Attribute listing applied primarily to improve
tangible object
It lists the parts and essential features of the object and
systematically analyzes modifications intended as improvements
k. Scientific method rigorous method for finding optimal solutions using
classical concepts such as statistics, simulation, logical thinking and
other mathematical techniques to develop and test hypotheses
l. Creative leap process that formulates an ideal solution and then
works back to a feasible one.

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