Operating effectiveness

Operating effectiveness
See also
Planned maintenance Process analysis Total quality control Program budget Quality improvement Single minute exchange of die Risk category Maintenance strategy Waste level monitoring

Operating effectiveness - the yield allowing an organization to convert, utilize minimal resources, (inputs) into maximum products (outputs) by factors like reducing defects in products, the cost or waste of time, energy, developing better products faster.

Evaluating the Operating Effectiveness of Controls at a Service Organization

When the user auditor's risk assessment includes an expectation that controls at the service company are operating efficiently, the user auditor should receive audit evidence concerning the operating effectiveness of those controls from one or more of the following procedures :

• receiving and reading a SOC 1 Type 2 report, if obtainable
• performing appropriate tests of controls at the service organization
• using another auditor to perform tests of controls at the service organization on behalf of the user auditor.

Design vs Operating Effectiveness

Audit Evidence Should Support Your	Design and Implementation	Operating Effectiveness
Understanding of how the control is designed	X	X
Evaluation of whether the design is effective	X	X
Determination that the control procedure has been implemented	X	X
Understanding of how the control procedure was applied throughout the period		X
Determination that the control was applied consistently throughout the period		X
Understanding of who or by what means the control was applied throughout the audit period		X

References

• AICPA (2017), Reporting on an Examination of Controls at a Service Organization Relevant to User Entities' Internal Control Over Financial Reporting (SOC 1) John Wiley & Sons
• Delaney P. R., Whittington O. R. (2011), Wiley CPA Examination Review, Outlines and Study Guides John Wiley & Sons
• Fitzgerald M. (2011), Report on Controls Placed in Operation and Tests of Operating Effectiveness for the Bureau of the Public Debt's Fed. Invest. Branch from August 1, 2009 to July 31 2010 DIANE Publishing
• Fowler E., Graves P. (2013), Managing an Effective Operation Routledge
• Mitchell J. S. (2015), Operational Excellence: Journey to Creating Sustainable Value John Wiley & Sons
• Zisman B. S. (2019), Banks and Thrifts: Government Enforcement and Receivership LexisNexis

Footnotes

Author: Klaudia Wojtas