part 3 a – 1 v3.0 the iia’s cia learning system tm section topics 1.quality management 2.the...

Part 3 A – 1V3.0

THE IIA’S CIA LEARNING SYSTEMTM

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Section Topics

1. Quality management

2. The International Organization for Standardization (ISO) framework

3. Forecasting

4. Project management techniques

5. Business process analysis

6. Inventory management techniques and concepts

7. Marketing—pricing objectives and policies

8. Marketing—supply chain management

9. Human resources

10.The balanced scorecard

Part 3, Section A

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• Definition of quality: Products or services that match or exceed customer expectations at an anticipated price

• Advantages of quality:

Increasing

Return on investment

Market share

Process reliability

Customer satisfaction

Decreasing

Manufacturing costs

Service calls

Product returns

Customer complaints

Quality

Part 3, Section A, Topic 1

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• Integrated quality management system

• Uses quantitative methods to continually improve an organization’s processes

Total Quality Management (TQM)


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TQM Critical Success Factors

Focus on the customer

Identify internal and external customers’ needs, requirements, and expectations.

Continuousimprovement

TQM as continuous, ongoing company-wide process to find and eliminate problems and waste.

Involve entire workforce

Empower all employees and encourage teamwork such as quality circles.

Active support by top management

Top leaders demonstrate commitment to TQM in every decision.

Clear measures and TQM training

Conformity, balanced scorecard, ongoing training, and education at every level.

Recognize quality achievements

Tie financial and nonfinancial incentives and rewards to TQM to encourage pride and teamwork.


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Creates:

Benefits and Challenges of Teams

• Diversity of perspective, skills, experience

• More practical solutions

• Better workplace acceptance

Requires:

• Time and resources for training in team process

• Strong leadership

• Time to build consensus


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• Product design • Vendor rating systems• Customer satisfaction• Manufacturing

TQM Quality Measures


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Costs of Quality

Prevention costs (to eliminate defects before production)

Reengineering and design, high-quality parts, improved processes, employee training

Appraisal costs (to eliminate defects before shipping)

Inspecting and testing raw materials and work in progress

Internal failure costs (to discover defects before products are sent to customer)

Handling, fixing, or disposing of products; opportunity cost of lost sales

External failure costs (to manage situation after customer receives defective products)

Return costs, warranty work, product liability claims, lost sales from damaged reputation


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Plan-Do-Check-Act Cycle Applied to Benchmarking


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Control Chart

5.0

3.0

1.0

Value

Time

Upper control limit

Average

Lower control limit


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Cause-and-Effect Diagram

Level 2 causeMain causeMain cause

Level 3 cause

Level 1 cause

Main cause

Main cause

Problem to be resolved (effect)


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Run Chart

02030405060708090

Number (Total)

280Y1

265Y2

280Y3

305Y4

353Y5

Control

Performance


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Which of the following quality tools would most effectively analyze an operation’s efficiency and control?

A. Benchmarking

B. Quality audits

C. Process-flow analysis (flowchart)

D. Gap analysis

Answer: C. A flowchart graphically shows the flow of activity through a process.

Discussion Question


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Standards provide:• Common basis for continuous improvement.• Defect and waste reduction standards.• Global standardization.• Customer quality and regulatory measures.• Customer satisfaction measures.• Environmental impact measures.

The International Organizationfor Standardization (ISO)


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Key Themes in 2000 Revisions to ISO 9001

• Enhanced role of management in quality initiatives

• Assured availability of trained staff and adequate resources

• Focus on customer needs and communication with customers

• Metrics and continuous quality improvement


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In which of the following scenarios would forecasting be helpful?

A. Sale projections

B. Cash flow

C. Cost estimation

D. All of the above

Answer: D. Analyzing past and present data is helpful in many different scenarios.

Discussion Question


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Qualitative Forecasting

Advantages Disadvantages

• Can be used when variable cannot be quantified

• Can be used when no historical data exists

• Expensive and labor- intensive

• Less accurate than formal methods


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• Delphi method– Forecasts developed through group consensus

• Expert judgment– Experts offer opinions on specific forecasts

• Scenario writing– Conceptual scenarios developed of the future

• Intuitive approach– Brainstorming sessions used to strategize future

Qualitative Forecasting Methods


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Quantitative ForecastingStatistical or mathematical models that depict interrelationships among factors or variables

Model Classifications

Descriptive models show relationships among variables.

Predictive models predict behavior when variables are changed.

Planning models determine optimal relationships.


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When can quantitative forecasting methods beused?

A. When past information about the forecasted variable is available

B. When past patterns will continue into the future

C. When the information can be quantified

D. All of the above

Answer: D. Quantitative methods often make use of statistical or mathematical models.

Discussion Question


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• Time series analysis• Smoothing methods• Causal methods• Learning curve analysis• Sensitivity analysis• Simulation

Quantitative Forecasting Methods


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• Measurements taken at successive points in time or over successive periods of time.

• Used to discover patterns in historical data and extrapolate these patterns into the future.

Time Series Analysis

Year

Monthly Sales

Time Series Components

Trend

Cycles

Seasonality

Irregular variations


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• Random fluctuations from irregular variations are averaged out.• Useful for stable time series and provide accurate short-range

forecasts.• Suited to manufacturing environments.

Smoothing Methods

Year

Monthly Sales

Smoothing Methods

Moving averages

Weighted moving averages

Exponential smoothing


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• Causal method based on assumption of cause-and-effect relationships among variables.

• Often used to analyze cost behavior or forecast sales levels.

Regression Analysis

Age in Years (Independent Variable)

Height in Inches (Dependent Variable)

Relevant range Scatter

Diagram

Simple linear regression


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Learning curve analysis is commonly used by which of the following types of businesses?

A. Aircraft manufacturers

B. Custom furniture manufacturers

C. Big-box retail organizations

D. Customer service organizations

Answer: A. It is also used in other firms by project managers to improve cost estimates when projects involve repetitive operations.

Discussion Question


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• Describes effects of changes on probabilities and/or payoffs on decision alternatives

• Conducts what-if analysis by plugging in different variables and building possible scenarios

• Offers useful information for financial applications and risk analysis

• Identifies critical assumptions• Compares alternative model structures• Identifies optimal resource allocation

Sensitivity Analysis


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One of the most widely used quantitative analysis techniques; computer models are developed and different values are plugged in to simulate effects of different scenarios.

Simulation

Selling price per unit = X

Computer generates labor cost per unit: X

Computer generates parts cost per unit: X

Computer generates first-year demand: X

Output = Profits

Computer loops and generates new values for each variable


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Qualitative Forecasting Tools:Fill in the blanks

Qualitative Tools Definition UsesForecasts developed through group consensus

Produces narrow spread of opinions

Experts weigh in with opinions or conclusions

Used when past conditions will not hold in the future

Conceptual scenarios of future based on set of assumptions

Decision maker decides likelihood of scenarios

Based on mind’s ability to process hard-to- quantify information

Examples are brainstorming sessions

Delphi method

Expert judgment

Scenario writing

Intuitive approach


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Quantitative Forecasting Tools:Fill in the blanks

Quantitative Tools Definition Uses

Series of measurements taken at different points

Past patterns are extrapolated into future

Average out random fluctuations

Short-range forecasts and manufacturing

Obtains equation that best fits a set of data

Examines relationships in order to predict the expected

Estimates costs based on increased learning

Industries using repetitive operations

Shows effects of changes in probabilities

Financial applications and risk analysis

Computer modeling of system operations

Simulates effects of changed assumptions

Smoothing methods

Regression analysis

Sensitivity analysis

Learning curve analysis

Simulation

Time series analysis


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• Within defined constraints.• At a desired performance/quality level.• By effectively optimizing allocation and integration of inputs

needed to meet objectives.

Project Management Basics

Challenges are to deliver a project:

Project management process:• Plan, organize, direct, and control an organization’s

resources (people, equipment, time, and money).• Achieve organization’s objectives within defined

scope, time, and cost constraints.


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Project Life Cycle:Fill in the blanks

Project Phase Project Tasks

Spell out measurable goals; develop project charter with costs, objectives, tasks, deliverables, and schedules.

Determine and allocate resources needed, establish major timetable milestones, define deliverables.

Launch the plan, confirm adequate and appropriate project resources, document work teams.

Track progress, compare actual and predicted outcomes, analyze impact, make adjustments.

Obtain client acceptance, install deliverables, complete documentation and evaluation, issue final report.

Conception

Execution and production

Monitoring and control

Completion and evaluation

Planning, design, and scheduling


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Project Team—Core Members

Project sponsor Provides financial

resources

Project manager Leader of the project

Project stakeholders

Actively involved in project


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Project Management Triangle

Time available to complete project

Cost—budgeted amount available

Scope—quality and performance


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Gantt Chart• Divides project into sequential activities with estimated start and

completion times. • Project manager plots steps of project and their sequence and

duration.

Activity

A

B

C

June July August

TimeSource: Sawyer’s Internal Auditing, fifth edition, by Lawrence B. Sawyer, et al. Used with permission.


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• Critical path method (CPM)

• Program evaluation review technique (PERT)

• Determines most efficient path for reaching project goals

Network Analysis


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PERT/CPM Chart

Chart identifies the path within a project that will take the longest.

E H4

Source: Sawyer’s Internal Auditing, fifth edition, by Lawrence B. Sawyer, et al. Used with permission.


3

1

2

7

48

6

AD

GI

CJ

B F

3032

42

22

44

2436

44

518

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What are PERT/CPM charts generally usedfor? (Select all that apply.)

I. For large, complex projects

II. To expedite a project and lower costs

III. For internal audit scheduling

Answer: I and II. Network analysis is used for projects with high inter-task dependency.

Discussion Question


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Reinforcing Activity 3-1Part 3, Section A, Topic 4

Project Management Techniques


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Business Process Analysis

Define process boundaries

Processanalysis

Determine capacity of each step and identify/evaluate bottlenecks

Use analysis to improve processes

Identify systems, processes, tasks, and jobs

Diagram interrelationships of activities

Analyze and improve basic organizational processes


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• Efficiency: Process achieves results with minimal waste, expense, and/or cycle time.

• Quality or effectiveness: Process produces desired result and meets or exceeds customer expectations.

• Capacity: Process bottlenecks are identified.• Delivery time: Process provides dependable or fast

delivery of product or service.• Flexibility: Process has low cost or short time for

changing inputs or outputs and is adaptable for future.

Business Process Performance Measures


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Analyzes operations for efficiency and control

Process Flowchart


Payment envelope received

Envelopes delivered to processing

Correct amount received?

Accounts receivable update Notify customer ofproblem

Yes No

Envelopes processed

Send confirmation to customer

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What part of an overall system operation is determined by the bottleneck?

A. Effectiveness

B. Delivery time

C. Quality

D. Capacity

Answer: D. Overall operations capacity is determined by the bottleneck.

Discussion Question


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Every system has at least one constraint (bottleneck or barrier) limiting its output. Effectively managing the constraint is the key to the system’s success.

Theory of Constraints (TOC)


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Linear Programming

A way of allocating limited resources that can be distributed differently (but proportionately) for optimal efficiency

Problem: Figure out how to put limited space on a factory floor to optimal use by producing different items with unique production costs, profit margins, and demands.


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TOC’s Five Steps to System Improvement

Step 5. Go back to Step 1.

Step 1. Identify the system constraint.

Step 4. Add capacity to the constraint.

Step 3. Maximize flow through the constraint.

Step 2. Decide how to exploit the constraint.


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• Fundamental: Forces people to examine underlying assumptions about current business processes.

• Dramatic: Redesigns business processes completely in organizations needing “heavy blasting.”

• Radical: Encourages reinvention rather than improvement or modification.

• Process: Focuses on simplification and elimination of wasted effort. Activities that do not add value to a product or service should be eliminated.

Business Process Reengineering (BPR) Key Principles


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• Areas targeted include accounts payable/ procurement, month-end closing, order entry, accounts receivable, capital expenditures.

• BPR can eliminate control elements like segregation of duties, cross-checks, authorization, verification.

• Implementation of new technologies may require specialized audit knowledge and attention.

• Requires identification and evaluation of significant exposures to risk as a result of BPR efforts.

• Must help organization maintain effective controls by continuous monitoring and improvement.

Impact of BPR on Internal Auditing Activities


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• A quality process improvement approach focused on reducing the number of defects to statistical insignificance.

• DMAIC

Six Sigma

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Define nature of problem.

Measure performance/ record data

on underlying problems.

Analyze data to

determine root cause of problem.

Improve process by

effecting solutions.

Control process until solutions are

ingrained.


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Business Process Analysis


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• Reduce inventory holding and transportation costs without sacrificing customer service.

Inventory Performance Indicators

• Reduce inventory costs related to holding, ordering, and transporting materials, supplies, and finished goods.

• Achieve customer satisfaction targets related to quality, availability, and on-time delivery of products and services.

Definition of Inventory Management


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Inventory Types

Raw materials

WIP Finished goods

MRO


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Which of the following is NOT a reason to hold inventory?

A. To cover supply and demand fluctuations

B. To fill the pipeline

C. To meet future demand

D. To reduce labor costs

Answer: D. Holding inventory would not necessarily reduce labor costs.

Discussion Question


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Inventory Costs

OrderingPurchasing

Carrying Stockout Set-up


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• EOQ calculates optimal inventory quantity to order and when order should be placed. It produces order size that provides lowest total cost for holding, ordering, and set-up.

Economic Order Quantity (EOQ)

2AR × OC

EOQCC

Where:

AR = Annual requirement

OC = Order cost per order

CC = Carrying cost per unit


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EOQ Model

Inventory Level

TimeLead time Stockout

Order goods

Receive goods

Amount ordered

Safety stock

Reorder level

Average inventory level

Source: Adapted from Sawyer’s Internal Auditing, fifth edition, by Lawrence B. Sawyer, et al. Used with permission.


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• Production and inventory control system in which materials arrive exactly when needed for each stage of the production process.

JIT Objectives • Reduce waste of resources by meeting targets with

minimum amount of materials, equipment, and labor.

• Strive for continuous productivity improvements.• Reduce inventory quantities and improve

manufacturing processes.• Allow demand to trigger every step.

Just-in-Time Manufacturing (JIT)


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Which of the following is NOT a characteristic of JIT systems?

A. Production organized into cells

B. Less reliance on suppliers

C. Reduced set-up times

D. Elimination of variability

Answer: B. JIT systems rely on suppliers for on-time delivery of high-quality goods.

Discussion Question


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Benefits and Limitations of a JIT SystemFinancial/General Benefits Limitations

Financial• Lower inventory investments/

manufacturing costs• Reduced inventory handling/carrying

costs• Less risk of obsolete inventory• Less space needed• Faster response increases revenueGeneral• Reduced inventory and labor• Reduced set-up, manufacturing lead,

and cycle times• No overproduction• Better quality, less waste• Easier inventory control• Less paperwork• Strong supplier relationships

• No buffer inventory means potential exists for increased idle time

• Serious dependence on the supply chain to maintain adequate stock to meet unpredictable demand

• Critical parts shortages can shut down entire line due to stockouts at suppliers

• Potential exists for overtime expenses from unanticipated orders


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Lean: Improvement initiative focused on reduction or elimination of waste by minimizing amount of resources used in all activities.

Materials requirement planning (MRP): Traditional “push through” manufacturing system where master production schedule indicates timing and quantities of each part produced.

Computer-integrated manufacturing (CIM): System that integrates all factory and office functions within an organization throughout entire life cycle of a product or service.

Lean, MRP, and CIM


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Inventory Management


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Internal and External Factors Affecting Pricing

Internal Factors External Factors• Material costs

• Development/manufacturing costs

• Overhead expenses and labor costs

• Cycle time and time to market

• Estimated product or service life

• Service and target costs

• Product portfolio mix

• Bundling/cross-selling opportunities

• Corporate objectives/strategic fit

• Customer discounts for large purchases

• The industry

• Product maturity and stage in product life cycle

• Buyers’ value perception and price sensitivity

• Distribution channels

• Immediate competition/substitutes

• Government laws and other regulatory policies

• Economic conditions

• Price the market will bear


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Marketing Strategies

Market dominance

Market focus

Market distribution


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Competition-based pricing

Value-based pricing

Cost-based pricing

Pricing Approaches

Captive pricing

Pricing Approaches


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Break-even pricing is used to establish a frame of reference. It determines the number of units that must be sold at a set price to cover all fixed and variable costs.

Cost-plus pricing reveals the lowest reasonable price level for the product. It uses an accurate analysis of cost per unit to calculate the selling price for a product or service.

Average Unit Cost

Price = 1 Markup Percentage

Cost-based Pricing

Total Fixed Costs

Break-Even (Units) = Unit Price Unit Variable Cost


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Value-based pricing • Also called value-added or demand-based pricing.• Estimates the value of a product or service to the buyer.• Determines how much buyers are willing to pay.• Sets price based on unique characteristics of product or

service.

Competition-based (market-based) pricing • Takes competitors’ prices into account.• Prices are set equal to or at some percentage above or

below competition prices.• Estimates price (target price) that consumer is willing to pay.

Other Pricing Approaches


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Target pricing estimates the price for a product that customers will pay based on

A. how competitors will price competingproducts.

B. the unique features of the product.

C. the lowest reasonable price for the product.

D. customers’ response to the price.

Answer: A. Competition from lower-cost producers leaves less time to recover from pricing mistakes.

Discussion Question


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Impact of public policy on pricing products orservices. Current laws make the following practicesillegal:

Legal/Ethical Considerations

• Price fixing

• Price discrimination

• Deceptive pricing

Ethical decisions are more subjective. Many organizations develop ethical guidelines in pricing decisions and practices.


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Basic Supply Chain Flows

Supplier Producer Customer

Information flow

Primary product flowPrimary cash flow

Primary product flow

Reverse product flow


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Supply Chain Management Processes

Customer relationship management

Order fulfillment

Manufacturing flow

management

Demand management

Supplier relationship management

Customer service

management

Product development


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Vertical and Lateral Integration

Vertical Integration = Control

Entrepreneurial base

Layers of management

Mergers and acquisitions

Lateral Integration = Out-sourcing

Independent

Independent Independent

Independent


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Which of the following is a risk associated with the supply chain?

A. Reliance on a single supplier

B. Ineffective supply chain management

C. Reliance on off-shore suppliers

D. All of the above

Answer: D. Many organizations rely heavily on out-sourcing processes and components.

Discussion Question


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The four Cs of marketing:• Customer is the primary focus.• Cost analysis must take into account all

issues customers consider before buying.• Convenience and cost/value are interrelated.• Communication means having a dialogue

with customers. Listen to what customers want.

Customer Needs Drive Strategic Marketing


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Common Distribution Channels

Producer AgentsWhole-salers Retailers Customer

Organizational buyers

Producer Agents Distribu-tors

Industrial Products

Consumer Products


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Distribution Channel Activities and FunctionsActivity Description

Marketing intermediaries

Reduce number of transactions for producers and end users

Product inventory Helps meet buyers’ needs and preferences

Transportation Eliminates geographical gaps between buyers/sellers

Financing Facilitates the monetary/currency exchange function

Processing/storage Maintains inventory and assembles orders for shipment

Advertising/promotion Communicates product availability, features, benefits

Pricing Sets the basis of exchange between buyer and seller

Risk reduction Provides insurance, return policies, futures trading

Personal selling Provides sales, product information, and support services

Service and repairs Provides essential customer support and service


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Channel Types and Structure

Independent distributor

Independent intermediary

Independent supplier

Conventional Distribution Channel

Buy/sell

Buy/sell

Independent retailer

Independent wholesaler

Channel manager

Vertical Marketing System (VMS)

Channel is coordinated by a manager who sets operating rules and provides support services.


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Processes and activities that ensure effective and efficient use of human capital to accomplish organization’s goals.

Strategic Human Resource Management

Processes and activities

Manage training, hiring, and compliance.

Restructure organization.

Administer compensation and benefit programs.

Prepare for change.

Develop performance management systems.


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A successful performance management system:• Provides information to employees about their

performance.• Clarifies organizational expectations.• Identifies development needs.• Documents employee performance for personnel

records.

Individual performance management involves:• Setting goals.• Communicating the goals to employees.• Giving employees feedback on how they performed.

Performance Management


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Performance Standards

• Written

• Brief

• Realistic

• Precise

• Consistent


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Performance Measurement

Performance Appraisals

• Measure performance related to performance standards.

• Provide basis for pay, rewards, training, and promotions.

• Provide feedback and counseling to employees.

• Provide legal documentation.


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Common Appraisal Steps

Step 1 Step 2 Step 3 Step 4

Observe employee

performing job.

Identify and record

strengths and areas for

improvement.

Rate employee on

progress toward prior objectives.

Reinforce and correct employee

performance.

Step 5

Set new goals for

improvement.


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Appraisal Methods:Fill in the blanks

Method DescriptionLeast complex method; includes graphic scale, checklist, and forced choice.

Also called multisource rating; solicits feedback from everyone employee interacts with.

Compare employee performance with that of others; include ranking, paired comparison, and forced distribution.

Written performance appraisals; include essays, critical incidents, and field reviews.

Employees help set their own goals by defining what they hope to achieve within a specific period of time.

Examples of desirable and undesirable behavior are correlated with different performance levels.

Category rating

Comparative methods

Narrative methods

Management by objectives (MBO)

360-degree feedback

Behaviorally anchored rating scale


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Appraisal Errors

Varying standards: Appraiser applies different standards and expectations for employees performing similar jobs.

Recency/primacy effect: Appraiser gives greater weight to recent events or information received first.

Central tendency, leniency, strictness: Appraiser rates within too narrow a range or is too lenient or too strict.Bias: Appraiser’s own values distort the assessment.

Halo/horn effect: Appraiser rates a person high or low in all areas because of performance in one area.

Contrast error: Appraiser rates employees against others instead of against performance standards.


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When giving feedback to employees, appraisers should

A. give general examples of performance.

B. discuss specific steps for improvement.

C. use a forceful approach.

D. focus on past behavior.

Answer: B. Develop an action plan to help employees achieve goals.

Discussion Question


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• An individual’s ability to do the work.• Amount of effort employee expends (motivation).• How well the organization supports the employee.

Individual motivation is affected by:• Level of meaningful activities and rewards.• Contributions to an individual’s self-esteem.• Recognition, achievement, and advancement opportunities.• Reward opportunities tied to performance increases.• Career development opportunities.• Work/home life balance.• Job satisfaction.

Performance = Ability Effort Support

Individual performance factors include:

Performance Factors


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Job analysis information includes: • Work activities and

behaviors.• Interactions with others.• Performance standards.• Machines and equipment

used.• Working conditions.• Necessary KSAs.

Job analysis information is used in: • Legal defensibility of

employment practices. • Organizational design.• Establishing performance

standards.• Time management/goal

setting.• Training.• Establishing career paths/

succession planning.

Job AnalysisThe process of gathering and analyzing information about the content, context, and requirements of jobs


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Job Analysis Methods:Fill in the blanks

Method Description

Observer takes notes while watching an individual perform the job; best used for repetitive jobs or in conjunction with other job analysis methods.

Observer visits each job site and talks with the employee performing the job using a standardized form; good for difficult-to-define jobs.

Widely used method requiring survey instrument that is given to employees and managers; inexpensive method allowing information to be gathered about many jobs quickly.

Employee keeps log of his or her job duties, frequency, and time required for each duty; may be perceived as burdensome.

Observation

Questionnaires

Work diary or log

Interview


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Job Analysis Outcomes

Job Description Job Specifications

• Job title and location

• Organizational relationships

• Task, duties, and responsibilities

• Working conditions

• Level of financial accountability

• Education and experience

• Work skill requirements

• Personal abilities

• Mental and physical requirements

• Judgment


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Employee Selection Process

Applicant pool

Make offers

Analyze applications

Interview candidates

Test candi-dates

Topic 9Part 3, Section A, Topic 9

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Why is a structured interview the mosteffective type of interview?

A. It uses a set of standardized questions.

B. It provides insights not available by otherinterview methods.

C. It tests reactions to stress.

D. It tests an applicant’s honesty.

Answer: A. This allows comparisons among candidates to be made easily.

Discussion Question


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Focuses on efforts that develop competencies, value, and competitive advantages for an organization

Strategic Training

Training Process

Assessment Design Delivery Evaluation


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When choosing appropriate training methods, consider:

• Nature of training.• Subject matter.• Number of trainees.• Individual vs. team.• Self-paced vs. guided.• Training resources/

costs.• Geographic locations.• Completion time line.

• Internal training: Cheaper; reduces the need to send employees away or bring in outside trainers.

– Informal: apprenticeships, coaching, mentoring.

– On-the-job: Supervisor or manager shows employee what to do.

• External training: Use when no internal training is available or to train many people quickly.

– Out-sourcing: Outside vendors and trainers are brought in to provide training.

– Computer-assisted/e-learning: Use Internet/intranet.

Training Considerations and Methods


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Workers’ compensation: Employers contribute to an insurance fund to compensate employees for injuries on the job.

Americans with Disabilities Act (ADA): Affects the type of work an injured employee can be asked to do and requires specific security/access measures related to medical information.

Child labor laws: Set minimum age for employment (16 for most employment and 18 for “hazardous” work).

Occupational Safety and Health Act (OSHA): Specific standards that regulate equipment and working environments.

Major US Health and Safety Laws


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Canadian Environmental Protection Act (CEPA): Protects the environment and health of Canadian citizens from risks of pollution and toxins at home and in the workplace.

Canada Labour Code: Affects federal employees and includes provisions covering hours, wages, holidays, and vacations and sets similar standards to US OSHA laws.

Health and Safety at Work Act (UK): Requires UK employers to ensure safety, health, and welfare at work of all employees.

Amsterdam Treaty (EU): Specific standards to protect health and well-being of EU citizens at home and in the workplace.

International Health and Safety Laws


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Creating a Positive Work Environment

Align needs of both the organization and the employee:• Consistency and fairness

• Effective dispute resolution• Performance management• Skill development• Work/life balance


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Human Resources


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The balanced scorecard relates both financial and nonfinancial performance measures to the goals of

owners and customer satisfaction.

Learning and

growthCustomers Finance

Internal business

processes

Balanced Scorecard


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Measurement Perspectives:Fill in the blanksPerspective Goals Are Linked to:

Creating value for owners/shareholders, increasing shareholder wealth, providing growth, and providing a financial return commensurate with risks taken

Adding value for customers, providing innovative and high-quality products at low prices, increasing market share, and increasing customer satisfaction

Reducing defects and non-value-added activities, enhancing value-added activities, ensuring efficiency in the value chain, and providing on-time delivery

Investing in infrastructure, providing adequate training and resources, developing a multiskilled workforce, and increasing employee job satisfaction

Finance

Internal business processes

Learning and growth

Customers


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The balanced scorecard approach can be used to measure and manage performance of an organization’s

internal audit functions.

Balanced Scorecard and Internal Auditing

Focus on added value in all audit activities

Perform audits that consider

strategic objectives of the

organization


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Questions?

End of Section A

Part 3, Section A

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