1. In your opinion is there such thing as effective internal control? Explain.

Yes, there is. Because the escalating clamor for disclosure and fairness, combined with
growing volumes of business data amplified the demand for quality financial reporting which in
turn boosted the necessity of installing and imposing effective internal control as it is one of the
major requirements in producing a well-developed financial report. The businesses strive to
impose an effective internal control because without one it will be tenfold harder for an
organization to effectively and efficiently adapt to shifting operating settings, accomplish
objectives, mitigate risks to sufficient levels, and support sound decision making as well as
oversight of the organization. Because no control environment delivers performance measures,
encouragements, and rewards to drive responsibility for performance. Uncertainties and business
risks will not be managed due to the absence of risk assessment. Authorizations and approvals,
confirmations, reconciliations, and business performance reviews will not be possible without
the prevention and detection brought by control activities. Proper approvals of transactions and
sufficient separation of duties among personnel will not be fully implemented vouching for
undesirable aftermath. Areas needing modification will not be disseminated as it wasn't properly
evaluated through the help of information/communication and monitoring. Effective control
exists because the organizations are fully aware that just like a missing tooth, its importance will
be visible when it's not around to fill the gap.
2. As an accounting student, discuss the importance of having an effective operational audit in an
organization.
When commencing a business, it can seem like a very daunting prospect: an entire
financial entity under one's stewardship. Terrifying because there's a possibility that a company
prospering today -- not any more tomorrow. Some organizations were once leaders in their
sectors such as Kodak, Nokia, and Blackberry who have suffered tremendous deteriorations in
value and sector status due to the emergence of game-changing players and the inability to
properly assess both internal and external factors. Successive corporate scandals, malfeasance,
collusion, and unstoppable fraud also shook investors' confidence leading to tightened laws and
regulations. That's why to somehow regain the trust and confidence of the public they assure that
companies solidify their internal controls while maximizing the benefits provided by the
operational audit. The purpose of the operational audit process is to discern whether the company
imposes enough policies and procedures sufficient to produce a rule-based and optimum level of
efficiency and effectiveness. This is crucial for business because every industry stands to obtain
its predefined purposes and objectives while particularly stressing its ability to both survive and
have continuous profit. An effective operational audit also modifies business operations via
analyzing managerial, administrative, and operational aspects, making appropriate modifications.
It also supports the processes with the greatest need for modification, suggesting revised
strategies to areas where cost reductions can be made. Furthermore, it identifies the shortcomings
of a particular project while utilizing time and money to transform an activity into a profitable
spectrum. And to summarize its main goal -- to do more with the least amount of resources
possible.
3. From the uploaded video choose 3 skills that are required for an Operational Audit and give
your insights about it.
The changes that have been transpiring in the world where reality lies, imposing that the
careers that were considered in demand and bankable years ago are now slowly deliberately
rendered irrelevant by the power of artificial intelligence and machine intervention. Due to what
machines can offer they seem to be stealing the spotlight from humans; but technology, while it
can undoubtedly make tasks easier and more efficient, will still never be able to replace the
uniquely human skills honed through intense training and priceless familiarity.
The qualifications that are needed in the operational audit are much more than learning
debits and credits, analytical thinking, and in-depth attention to detail.
1. Communication Skills - Auditors need exceptional communication skills to prosper in
their profession so that they can facilitate understanding of audit findings effectively.
Auditors should be assertive while attaining to master excellent communication skills
to fully unlock the level of proficiency and competence. Because, excellent
communication skills both enable auditors to have connection and gain information
with managers, employees, and external parties even they have diverse cultures and
rankings. In addition, their efforts to skillfully compile reports and discover material
misstatements to fully serve the very purpose of the operational audit will be futile if
they cannot convincingly communicate their findings articulately. They should be
eloquent and have enough skills to elaborate points to the satisfaction of the
committee.
2. Staff training and development skills - To say that operational audit is important is an
understatement, however, to stay afloat, the navigators and their teams have to adapt
to ever-changing mechanisms of how the business operates. Operational audits both
provide ongoing monitoring and corroboration of the effectiveness of the internal
control as well as an opportunity to speed up and improve the continuous
implementation of the system through careful monitoring and observation. The best
option to keep up with this is through training and continuous development. Training
ensures that auditors' abilities keep pace with the recent standards and ensures that the
proficiency stays pertinent to deliver high-class professional service. Operational
auditors’ training is probably one of the outstanding value-added and progressive
investment companies can resort into, to improve the whole operation of the
company. Through regulated and organized arrangements provided by training, staff
will be able to improve their overall mastery and knowledge. The training, however,
should be congruent, relevant, and suitable for the complexity of the areas to be
audited and encompass training that focuses on the company's internal audit
processing systems.

3. Information Communication Technology Skills - The evolving awareness of the

necessity to use computers in domestic, commercial, and industries have brought
about a new turn in the way audit is planned and conducted. Information Technology
 has taken over most of the business activities and has spread over its utilization
beyond unimaginable tendencies. The existence of computer technology and tools
enables the auditors to reasonably confirm, assess and measure the effectiveness of
the system while validating if the data received for processing purposes is licensed
and has been properly translated into proper computer language appropriate for fair
presentation. This skill has greatly helped auditors to evaluate deeply the flaws and
lapses that have to be changed or improved immediately to prevent generating future
repercussions. However, concern arises from leaders of the audit organization,
according to them the staggeringly fast-changing information technologies may
overwhelm the control capabilities of Auditors unless they constantly up-skill
themselves at a speed consistent with the changes taking place. To be effective,
Auditors need to understand the security sensitivity of a Computer-based
Environment and be able to combat and prevent computer-related fraud while
keeping in mind their primary goal which is to effectively optimize the whole
operation.
4. In your own understanding why do we need to assess the risks before conducting our audit?
Getting caught out in inclement weather can be extremely dangerous. That's why hikers
assess the weather and the directions because no one would like to be lost or to be soaked in rain
during hiking. Same is true with auditors, they assessed the risks beforehand so that procedures
can be selected with more assurance and appropriate procedures will be designed. If the auditor
has enough knowledge and reasonable estimate of risks regarding the overall operation of an
entity, as well as the internal and external factors affecting the operation of the business it will be
twice effective for him/her to spot inconsistencies and ineffectiveness within the operation that
might affect the fairness of financial report. There are various risks that may be encountered in
the performance of the audit, that's why it is impossible to measure all risks, however, it is vital
to know beforehand what kind of flora and fauna an auditor will be running into so that he/she
can either strengthen or lessen the audit procedures needed to transpire the audit objectives.
5. Based on the video there are different types of operational risks, choose two risks and explain
well.
The definition of operational risk is said to be, "the risk of a casualty occurring from
insufficient, incompetent, or failed internal processes, people, and systems, or from external
events, but is better viewed as the risk arising from the execution of an institution’s business
functions." Operational risk sources may be external or internal to the company and are usually
induced by, processes, people, and technology.
1. Capacity Risks - Capacity reminds the whole operation of the limitation of its production
depending on what it can produce within the relevant range. Equipment and machinery
are also facing degradation over time restricting the company's ability to operate above
the demand of the market. Analyzing capacity risks within a company is crucial because
it enables the operators to determine the output limitation and provide major insight on
how to control and minimize costs. Failure to properly estimate the risk might result in an
 excess capacity where actual production is less than what is achievable or optimal for a
firm. This often means that the demand in the market for the product is below what the
firm could potentially supply to the market. A discrepancy between the capacity of an
organization and the demands of its customers results in inefficiency, either in under-
utilized resources or unfulfilled customer demand. The goal of analyzing capacity risk is
to minimize this discrepancy. Mitigating capacity risk can either be achieved through
introducing new techniques, equipment and materials, adjusting the number of workers or
machines, increasing/decreasing the number of shifts, or acquiring/maximizing additional
production facilities.

2. Political Risks - The political environment perhaps is one of the hardest risks to calculate
among other factors. Re-election happened every few years and new legislations are put
into law depending on what the new leaders perceived to be the best option for the
country. Political risk is a type of prevalent risk faced by corporations and investors that
greatly affect the profitability of a business. It either leads to instability or unfamiliarity.
Instability encompassing investment returns could arise from a change in leaders,
legislative bodies, or new pervasive military control. This type of risk can impact a
business by making the market environment more or less friendly for that certain
industry. Typically, governments have a great deal of power over businesses, and many
times, there is not much that businesses can do about it. These factors can store up and
change the entire results, hence, companies should be able to deal with the changes
before and after it arises.