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Pertemuan 25Managing The Effectiveness of The Audit

Department

Matakuliah :A0274/Pengelolaan Fungsi Audit Sistem Informasi

Tahun : 2005

Versi : 1/1

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Learning Outcomes

Pada akhir pertemuan ini, diharapkan mahasiswa

akan mampu :

• Mahasiswa dapat menunjukkan hubungan antara quality assurance, continuous improvement system for internal auditor dan marketing fungsi audit dalam mengatur efektivitas dalam department audit.

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Outline Materi

• Continuous Improvement Systems for Internal Auditors– Balanced Scorecard– Value-Based Metrics– Activity-Based Costing– Total Quality Management– ISO 9000 Family– Baldrige National Quality Program/Baldrige

Award– Conclusion

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Continuous Improvement Systems for Internal Auditors

• Continuous quality improvement methodologies can provide the tools to lead internal audit into becoming, or maintaining, a world-class status. Most of the current continuous improvement programs were designed for manufacturing and then adopted to service organization.

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• They include:– Total Quality Management (TQM)– Six Sigma– Baldrige National Quality Program– Kaizen– Theory of Constraints– Balance Scorecard– Value-Based Metrics (VBM)– The International Organization for

Standardization (ISO) 9000 family

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• Other improvement methodologies that are not necessarily continuous include:– Activity-Based Costing– Business Process Reengineering (BPR)

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Balanced Scorecard

• The center of the Balanced Scorecard System is the entity’s strategy and vision.

• Users of Balanced Scorecard learn to take advantage of non-financial measures successfully.

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• Measures are made from four perspectives:– Customers.– Internal Business Process.– Learning and Growth.– Financial.

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Value-Based Metrics

• A system similar to Balanced Scorecard -is Value-Based Metrics (VBM). Like Balanced Scorecard, the VBM approach ties measures into strategic objectives. VBM are particularly useful as the basis for incentive compensation, resource allocation, investor relations and other areas. The true drivers of VBM are often non-financial. In the VBM system, VBM and targets are set that are aligned (linked) to business strategies.

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• The following is a sample of possible non-financial measures in VBM:– Innovation– Growth– Operating effectiveness– Operating efficiency– Employee skills and training– On-time delivery of services– Customer satisfaction and retention– Value chain

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Activity-Based Costing

• Activity-Based Costing (ABC) is a cost accounting theory used to allocate overhead costs to products based on the cost of the activities that are required to produce the product or deliver the service.

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Total Quality Management

• Total Quality Management (TQM) is another strategic approach to business improvement.

• TQM may use a variety of tools and techniques to seek continuous improvement of quality, productivity, flexibility, durability and customer responsiveness.

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• Entities that use TQM need to commit to:– Even better, more appealing, less-variable quality of

the product or service– Even quicker, less-variable response – from design

and development through supplier and sales channels, offices and plants all the way to the final user

– Even greater flexibility in adjusting to customers’ shifting volume and mix requirement

– Even lower cost through quality improvement, rework reduction and non-value adding waste elimination

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• Total Quality Management (TQM) is an applicable continuous improvement approach, which applied appropriately, should be effective in achieving and maintaining high quality.

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ISO 9000 Family

• The International Organization for Standardization (ISO) is another continuous improvement system.

• Generic means that the same standards can be applied to any organization, large or small, whatever its product – even if the “product” is actually a service – in any sector of activity and whether it is a business enterprise, a public administration or a government department.

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• Management system refers to what the organization does to manage its processes or activities. In a very small organization, there is probably no “system,” as such, just “our way of doing things,” and “our way” is probably not written down but all in the manager’s or owner’s head.

• The larger the organization, and the more people involved, the more the likelihood that there are some written procedures, instructions, forms or records.

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• These help ensure that everyone is not just “doing his or her thing,” and that there is a minimum of order in the way the organization goes about its business, so that time, money and other resources are utilized efficiently.

• To be really efficient and effective, the organization can manage its way of doing things by systemizing it.

• This ensures that nothing important is left out and that everyone is clear about who is responsible for doing what, when, how, why and where.

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• Management system standards provide the organization with a model to follow in setting up and operating the management system. This model incorporates the features that experts in the field have agreed upon as representing the state of the art.

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Baldrige National Quality Program/Baldrige Award

• The Baldrige National Quality Program (BNQP) is supervised by the National Institute of Standards and Technology and it makes awards each year.

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• The Award criteria, continually improved since 1988, include seven categories:– Leadership– Strategic planning– Information and analysis– Human resource focus– Process management– Business results

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• Such companies use the Baldrige criteria to assess their management systems and improve performance in their management systems and improve performance in their most vital areas. Although BNQP applies only to organizations as a whole, the principles could be followed without officially applying for the Baldrige Award with successful results.

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Conclusions

• An overlap in criteria between these programs is clearly evident (e.g., customer focus).

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The EndThe End