What is an Operational Audit?

An operational audit is an examination of the manner in which an organization conducts business, with the objective of pointing out improvements that will increase its efficiency and effectiveness. This type of audit is substantially different from a normal audit, where the objective is to examine the adequacy of controls and to evaluate the fairness of presentation of the financial statements.

Operational audits are usually conducted by the internal audit staff, though specialists can be hired to conduct reviews in their areas of expertise. The primary users of the audit recommendations are the management team, and especially the managers of those areas that have been reviewed.

Advantages of an Operational Audit

There are several advantages to conducting an operational audit. First, it can identify opportunities for more streamlined processes, which can speed up deliverables while cutting costs. It can also result in enhanced controls, which reduce the risk of asset losses. A further benefit is that management is made aware of problem areas within the business, and so can correct them immediately, thereby reducing expenses.