SAN MIGUEL, CLARA MAE S.

CBET-01-501E

CHAPTER 9: DOCUMENTING ISSUES

1. Explain the elements of the CCCER/5C model.

CCCER/5C model is used when there is a discrepancy between the criteria and existing
conditions. This model provides a structured, reliable, simple, yet effective framework to document
these conditions. By following the model, internal auditors will organize their facts and be better
prepared to deliver a compelling argument for management to adopt their recommendations.

 Criteria whereas the criteria are what should be in place and it is used in making the evaluation
or verification, and consist of the expected performance. It is a standard or basis set by the
relevant stakeholders. The criteria consist of what should exist—the correct state. (Page 222)
 Condition is the current state and what is in place. It states s to what the auditor discovered as a
result of applying auditing procedures. It is the factual evidence that the internal auditor found
during the review. (Page 222)
 Cause is the reason why the condition exist. It also explains why there is a difference between
expected and actual conditions. Internal auditors should search for and identify the root causes
of the condition. Failing to do so will create a problem and it will end up in making inadequate
references that provide an insufficient solution. (Page 223)
 Effect establishes the consequence of the condition identified. It is related to the risks, or
exposure the organization, program, process, or others will face because the condition is not
consistent with the criteria. It is tremendously useful for the auditor to quantify as much as
possible the effect of the finding. This will make the finding more compelling and convincing,
and serve as a useful yardstick to determine if the finding has merit or not. (Page 223)
 Recommendations is the action, or collection of actions, that if effectively implemented, will
neutralize the cause, stop the effect, and restore the condition to the desirable state. . It is also
beneficial for the auditor to consider the principles of effective processes when making
recommendations. (Page 224)

2. What constitutes criteria and how can operational auditors identify it?

Criteria is set by the relevant stakeholders. It can be established through external, internal
expectations, or a combinations of those reflected in contracts and SLAs. Internal auditors may identify
this by using the organization’s mission, values, and prevailing best practices as the basis for their
review. (Page 222)

3. What constitutes the condition and how can operational auditors define it?

Conditions refers to what the auditor discovered as a result of applying auditing procedures.
Internal auditor found this during the review and it serves as a factual evidenced. The condition is the
current state. Internal audit procedures include gathering testimony, reviewing documents, observing
the work conditions and dynamics, and performing calculations of important figures, where applicable.
(Page 223)
4. What constitutes the cause and how can operational auditors find it?

The cause is the reason the condition exists. The cause explains why there is a difference
between expected and actual conditions. Identifying the root cause is the crucial part for the internal
auditor. In order to help the internal auditor in finding the root cause is by asking 5 Whys, creating a
cause and effect diagram and drill down or breaking down the condition into smaller parts to gain a
better understanding of the larger picture. This could also involve data analytics. (Page 223)

5. What constitutes the effect and how can operational auditors calculate it?

The effect constitutes the consequence of the condition identified. It is related to the risk or
exposure the organization, program, process, or others will face because the condition is not consistent
with the criteria. Internal auditors can accurately calculate is to make sure that the auditor has in fact
identified a finding worthy of being included in the report is to ask: “So what?” Why should anyone care
about this condition? It is extremely helpful for the auditor to quantify as much as possible the effect of
the finding. This will make the finding more compelling and convincing, and serve as a useful yardstick to
determine if the finding has merit or not. (Page 224)

6. What constitutes the recommendation and how can operational auditors formulate it?

Recommendation is the action, or collection of actions, that if successfully implemented, will

neutralize the cause, stop the effect, and restore the condition to the desirable state. In formulating
effective recommendations auditors should fully capturing the details about each of the components of
the CCCER model and consider the principles of effective processes like the Poka Yoke. (Page 224)

7. Explain three methodologies that can help operational auditors find the root cause of operational
deficiencies.

The three methodologies are:

 Asking the 5 Whys until you get to the root cause of the issue.
 Creating a diagram (fishbone diagram) to show visually all the possible factors creating the issue
to see where the problem may have started also known as cause and effect diagram.
 Breaking down the condition into smaller parts to gain a better understanding of the larger
picture. This could also involve data analytics. (Drill down) (Page 223)

8. List three actions that can help to make findings and recommendations more persuasive.

Findings and recommendations will be persuasive to the extent that they convince the reader
that there is a real problem that requires correction. This can be achieved through a number of actions:

Quantify as much as possible. Internal auditors should provide a written report and present a
data to support their arguments and tell to the readers how big the problem is by expressing it
in in monetary terms, number of units, percentage of transactions affected, how many people
are impacted, and how long the problem has been occurring. Abundant and reliable data will
compel the reader that a problem exists.
Make sure findings are significant. To avoid any complications, audit findings should be
accurate and detailed.
 Consider the cost/benefit involved. Internal auditors should evaluate quantitative and
qualitative costs and benefits in an effort to refrain from presenting problems that are not
particularly significant and require a higher cost to correct.

9. Explain the use of logic, character of the presenter, and emotion as tools for persuasion.

 Logic is derived from the Greek word for logos. To persuade the readers, presenter must
provide a basic of facts or reason because it will shows that the process is based on the
fact that people believe they are logical and reasonable, so if we appeal to this through
data, we expect them to respond accordingly and be persuaded by the strength of the
evidence.
 Character of the presenter is derived from the Greek word for ethos. Presenter must be
a trustworthy, honest, intelligent, or otherwise credible. If this was apply to the internal
auditor then the organizations must be believe on him or “if the auditor said it, it must
be true.”
 Emotion. Persuasion is based on expressing feelings on a subject, getting an emotional
reaction, or both. It is essential because using emotion strategically may help if it is done
with sincerity.

10. Explain three tactics used to persuade, distract, and divert the attention of others. How should
operational auditors use this knowledge to prevent being manipulated themselves?

Repetition. The perpetrator hopes that the recurrent repetition creates legitimacy. Some do this with
distorted and untrue statements. Because someone says it many times, that doesn’t make it true.

Will of the majority. Another approach is by on behalf of one’s argument as if it were the will of the
majority. This gives the person’s argument the aura of legitimacy. If that were so, then the mere fact
that many people share the same knowledge or opinion would lend it credence. But if that is fabricated,
then it is done with the intent of deception.

Generalization. Making unwarranted generalizations that represents one’s behavior as that of the whole
is another way to distort the truth. This consists of what is commonly stated as “everyone is doing it.”
While this may be so, it does not make the behavior acceptable.
REFERENCE:
Murdock, H. (2017). Operational Auditing: Principles and Techniques for a Changing
World. Broken Sound. Parkway, N.W.: CRC Press.