Operational Auditing is a non-financial audit that involves a systematic process of evaluating an organization’s (or part of an organization’s) effectiveness, efficiency, and economy of operations under management’s control, and reporting to appropriate persons the results of the evaluation along with recommendations for improvement.

Operational auditing focuses on management goals, initiatives and strategic plans to generate innovative solutions for the challenges that face the units and their managers. The process verifies the existence and effectiveness of management controls that are meant to ensure that the unit meets its operating objectives. The scope of the audit is expanded beyond the verification of financial controls or compliance with policies. Operational auditing looks for the existence of management controls (such as leadership, employee empowerment, teamwork, risk assessment, information, communication, resource allocation, productivity measurement, etc.) that support the financial controls in attaining goals set by the units. Desired results of operational audits include discovering innovative solutions, promoting creativity and new ideas, and recommending operational improvements.

The Division of Audit Services currently uses the risk-based audit approach in carrying out operational audits. Characteristics of this approach include:

• Identification of the greatest risks within the operation;
• Examination of the objectives/risks/controls to achieve maximum results; and,
• Assurance of control effectiveness.