Module Title:

BUSINESS MONITORING, EVALUATION AND AUDITING

Module Code: CCMMB701

Credits:5

Lecturer: Nkurikiyinka Grace

Academic year:2023-2024
LEARNING UNIT 2:
APPLY M&E SYSTEM
Learning unit 2 APPLY M&E SYSTEM .
2.1 Collect data according to the evaluation goals
2.2 Analyze data using the appropriate tools and
interpret results in line with the M & E goals and sector
indicators
 2.3 Report findings and formulate recommendation
 2.1 Collect data according to the evaluation goals
2.1.1.Profession ethics related to data collection
Ethical' refers to the understanding of the principles
of morality. If someone is ethical, they understand the
difference between what is morally right and wrong and
decide to behave in a morally correct way.
Data ethics, in the context of data collection and analysis,
encompasses a set of values and moral principles guiding
how data is collected, shared, and used. It involves
considering the rights and privacy of individuals whose data
is being collected and ensuring transparency and fairness in
data handling processes.
Why Ethical considerations in data collection? To ensure
 Confidentiality and Privacy
 Confidentiality refers to the obligation of researchers to
prevent unauthorized access to data Collected from
participants. This means protecting the data from
disclosure to unauthorized individuals or groups.
 Privacy relates more to participants' control over the
extent and manner of sharing personal information. In
essence, privacy concerns a participant's right to decide
when, how, and to what extent their personal information
will be shared.
 Informed consent
Informed consent is a process where
researchers inform participants about a study,
and the participants willingly choose whether
they want to participate.
 Anonymity
Anonymity means that there is no way for anyone
(including the researcher) to personally identify participants
in the study. This means that no personally-identifying
information can be collected in an anonymous study.
It is good practice to let people know who you
are (your name, organization and reason for
collecting data when you ask them if they would
like to participate.
 You should have permission from participants
(people providing the data) and they should be
made aware that their involvement is voluntary.
Participants are free to withdraw from any
active data collection or intervention program at
any point without pressure or fear of retaliation.
Avoid or minimize anything that will cause
physical or emotional harm to participants.
Make participants aware of any potential harms
prior to their participation
Try to remain neutral and unbiased. Don’t let
your personal opinions interfere with the data
collection process.
Be respectful of people’s time and when
possible, compensate them for it.
Be sure to protect the data you collect from
people. Do not leave anything with personal
information in a place that can easily be
accessed by people who do not need to see the
data (e.g. the back seat of your car). If possible,
keep the information in a secure, or locked
location.
After data are analyzed it is always good to share
the results back to the participants.
 In addition, implementing or revising decision in
response to the conclusions drawn from data collected
always cost manpower, time, money, and other
resources. And if the conclusions are wrong because the
data were poorly collected, these resources, which could
have been used otherwise, may be wasted or inefficiently
employed.
 Miss MUHOZA, collected data from UMUCYO
MICROFINANCE related to its strategic plan of 5
years, the causes of non-performing loans as well
as the causes of the bad customer service. But, he
shared these data with her boy friend
MUNYANEZA who was working in TWIGIRE
MICROFINANCE, and disclosed all the identities
of all respondents to the non-concerned people.
This led TWIGIRE MICROFINANCE to copy all
key data and applied them, before UMUCYO
microfinance did, and some staff who had given
information on bad customer service in UMUCYO
MICROFINANCE was fired. Discuss the
professional ethics principals which were
violated.
2.Provide examples of unethical data collection practices,
and Discuss the potential consequences of such unethical
behavior in M&E .
 2.1.2. Data Collection Techniques
 Desk review
Desk research is not about collecting data. Instead,
your role as a user researcher carrying out desk
research is to review previous research findings to gain
a broad understanding of the field.
This research method can be categorized into two
main types: internal desk research and external desk
research.
Internal desk research. Before you look elsewhere,
it is best to check the information already
available within your organization. Internal desk
research is the analysis of internal reports, data sets,
and statistics gathered by your organization
All data that you have collected up to this point can
be used to conclude what works and what needs to
be changed to ensure your prospect's satisfaction.
External secondary research, on the other hand,
refers to the study of information obtained from
external sources (not by your
organization/company).
 Observation
Observation is way of gathering data by watching
behaviour, events, or noting physical
characteristics in their natural setting.
When should you use observation for
evaluation?
 When you are trying to understand an
ongoing process or situation .
When you are gathering data on individual
behaviors or interactions between people.
 When you need to know about a physical
setting.  When data collection from
individuals is not a realistic option.
What are the advantages of observation?
Collect data where and when an event or
activity is occurring.
 Does not rely on people’s willingness or
ability to provide information.
Allows you to directly see what people do
rather than relying on what people say they
did
What are the disadvantages of observation?
Susceptible to observer bias
Susceptible to the “Hawthorne effect,” that is,
people usually perform better when they know
they are being observed, although indirect
observation may decrease this problem.
Can be expensive and time-consuming
compared to other data collection methods.
Does not increase your understanding of why
people behave as they do.
 Interview
 An interview is a conversation where questions
are asked to elicit information. The interviewer
is usually a professional or paid researcher,
sometimes trained, who poses questions to
the interviewee, in an alternating series of
usually brief questions and answers.
How to conduct interviews?
Build trust and establish rapport. It is
important that your respondent feels
comfortable answering questions honestly.
Keep a neutral demeanor. Most respondents
will not want to say things that they feel you
disagree with so it is important that you not
show strong reactions or emotions
Stay in control of the interview. Although it is
important to allow for flexibility during the
interview, you also need to set the direction
for the interview and keep the respondent
from straying from the topics you planned to
discuss.
Advantages of interviews The main advantages
of interviews are:
 Useful for gaining insight and context into a
topic.
 Allows the respondent to describe what is
important to her or him.
 Useful for gathering quotes and stories.
Disadvantages of interviews
The main disadvantages of interviews are:
 they can be very time-consuming: setting up,
interviewing, transcribing, analyzing,
feedback, reporting .
they can be costly
Different interviewers may understand and
transcribe interviews in different ways.
 Questionnaire
A questionnaire is a research instrument
consisting of a series of questions and other
prompts for the purpose of gathering
information from respondents. You can
administer questionnaires by mail, telephone,
using face-to-face interviews, as handouts, or
electronically (i.e., by email or through
Webbased questionnaires
 Focus group
A focus group is a small group of people, typically
representative of your target market, with whom you share
ideas and ask questions about your product, service, or
business. The individuals who make up the focus group
should be a mix of current customers and people who’ve
never made a purchase but might in the future.
Why Focus Groups?
Focus groups provide insights into how people
think and provide a deeper understanding of
the phenomena being studied.
Focus groups are group interviews that give
the researcher the ability to capture deeper
information more economically than individual
interviews.
2.1.3. Data Collection Process
Data collection is the process of gathering and measuring
information on variables of interest, in an established
systematic fashion that enables one to answer stated
research questions, test hypotheses, and evaluate
outcomes.
 Identification of types of data
Data can also be quantitative or qualitative
data.
Quantitative data deals with numbers and
things you can measure objectively: dimensions
such as height, width, and length, temperature
and humidity, prices, area and volume.
Qualitative data deals with characteristics
and descriptors that can't be easily measured,
but can be observed.
 Identification of target respondents
Target group specification is derived from defined research goals,

i.e. specification of who we want to interview according to whose

responses most interest to us. A target population is the population
to which the researcher ultimately wants to generalize the results.
This target population is the population from which the sample will
be drawn. It is incumbent on the researcher to clearly define the
target population. There are no strict rules to follow, and the
researcher must rely on logic and judgment. The population is
defined in keeping with the objectives of the study.

Sometimes, the entire population will be sufficiently small,

and the researcher can include the entire population in the

study. This type of research is called a census study because
data is gathered on every member of the population.
Usually, the population is too large for the researcher to

attempt to survey all of its members. A small, but carefully

chosen sample can be used to represent the population. The
sample reflects the characteristics of the population from
which it is drawn.
 Sampling methods
Sample size calculation
Outcome 2.2: Analyze data using appropriate tools and interpret
results in line with the M&E goals and sectors indicators.
Data analysis is the process of cleaning, analyzing, interpreting, and
visualizing data using various techniques and business intelligence
tools.

 It is the process of systematically examining data

with the purpose of spotlighting useful
information.
 It is the foundation of your business research.
It enables to:
Determine the impact of your work
Assess the quality of your programming
Become aware of the results of your research
 It consists of: examining, categorizing,
tabulating.
2.2.1.1. Quantitative Data Analysis
Quantitative data analysis techniques assist with
making sense of and communicating your data to
others by organizing, summarizing and exploring
your results. One way of summarizing data is to
produce a frequency distribution table or graph.
Frequency Distribution Table
A frequency distribution table groups data
into categories, showing the number of
observations in each category. These categories
are referred to as classes.
Once the class frequencies have been
produced, the distribution can be represented
graphically by column, row, dot or line graph.
It may also be appropriate to plot relative
frequencies to show the percentage of the
population within each class interval –
which enables the different sizes to be
directly compared.
Data grouped in table can be summarized
and different statistical calculation such
mean, mode, correlation etc
 Example 1:
 The following data represent the number of computers repaired
by an IPRC graduate who has a computer workshop in Kigali in
Twenty days during the month of March 2023. Calculate the mean
and the mode for this business

From the above raw data, we can group them in a table for easy analysis as you can see below:
From the above presented table, we can
calculate mean, determine the mode (the most
repeated note)
easily because data are grouped
Graphical analysis
Graphical analysis is a useful way to gain an instant
picture of the distribution of data and identify any
relationships that require further investigation.
Patterns in data can be discerned more easily when
displayed in graphs and a range of graphical techniques
can be used to present data in a pictorial format.
Example 1: During the research on methods of
transportation used by students while going to school in
one TVET has shown the following
percentages:
- 40% go by school bus
- 25% go by walk
- 20% go by bicycle
- and rest 15% go by car
Example : Draw a histogram from the given
data.
Test Score: 24-30 30-36 36-42 42-48 48-54
54-60
Frequency: 5 6 8 5 10 4
QUALITATIVE DATA ANALYSIS
Qualitative data analysis is the process in
which we move from the raw data that have
been collected as
part of the research study and use it to
provide explanations, understanding and
interpretation of the
phenomena, people and situations which we
are studying.
QUALITATIVE DATA ANALYSIS
Qualitative data analysis is the process in which
we move from the raw data that have been
collected as
part of the research study and use it to provide
explanations, understanding and interpretation
of the
phenomena, people and situations which we are
studying.
Qualitative data analysis involves such processes
as :
 Open coding (First organisation of the data to
try to make some sense of it),
Example: Putting together all collected
information related to one item such cause of
customer satisfaction.
Example: Connecting information linking
customers dissatisfaction (Item)to the kitchen
of a restaurant ( Item)
 Selective coding (Building of a story that
connects the categories), categorizing and
making sense of the essential meanings of the
phenomenon.
Example: A detailed and illustrating story of a
customer who claimed and left the restaurant
because of kitchen.
 The constant comparative method
The constant comparative method is the
process that we use in qualitative research in
which any newly collected data is compared
with previously collected data that was
collected in an earlier study. This is a
continuous ongoing procedure, because
theories are formed, enhanced, confirmed, or
even discounted as a result of any new data
that emerges from the study.
 2.2.2. Data Interpretation
 Data interpretation is concerned with making value
judgments of analyzed data according to the evaluation
criteria to make useful recommendations and lessons
learned.
There are two steps in the interpretation process:
TIPS
1. Data interpretation is done in order to evaluate the
business from comprehensive viewpoint of the five criteria
(Relevance, effectiveness, efficiency, impact and
sustainability) and draw a conclusion. This is the value
judgment process.

2. In data interpretation, hindering or contributing factors are

also analyzed. Influential factors should be identified by
utilizing the concepts of implementation failure or theory
failure
Example:
For instance, the chart against illustrates
data in relation to the production unit of a
bakery:
If the business target was 800 breads units
per week, effectiveness could be analyzed in
reference to this
target. Hence, some questions should be
raised and answered. Why is production so
unstable? What
hinders the bakery effectiveness?
Criteria for evaluation may vary according
the topic at hand and monitored sector.
Generally five criteria
2.3.1. Report tool/templatehe Monitoring report
template is made up of :
- Introduction
- Goals
- Planned activities
- Achievements
- Constraints and
- Proposed solutions/Recommendations
An outline of an evaluation report is made up of:
EXECUTIVE SUMMARY
Usually not more than five pages – the shorter the
better – intended to provide enough information
for busy people, but also to tease people‘s
appetite so that they want to read the full report.
PREFACE
Not essential, but a good place to thank people
and make a broad comment about the process,
findings etc.
CONTENTS PAGE
With page numbers, to help people find their way
around the report.
SECTION 1: INTRODUCTION:
Usually deals with background to the
project/organisation, background to the evaluation,
the brief to the evaluation team, the methodology,
the actual process and any problems that occurred.
SECTION 2: FINDINGS:
Here you would have sections dealing with the
important areas of findings, e.g. efficiency,
effectiveness
and impact, or the themes that have emerged.
SECTION 3: CONCLUSIONS:
Here you would draw conclusions from the
findings – the interpretation, what they mean. It is
quite useful to use a SWOT Analysis – explained in
Glossary of Terms - as a summary here.
SECTION 4: RECOMMENDATIONS:
This would give specific ideas for a way forward in
terms of addressing weaknesses and building on
strengths.
APPENDICES: (Here you would include Terms of
Reference, list of people interviewed,
questionnaires
used, possibly a map of the area and so on.
2.3.2. Report/Data presentation
Graphics presentation
Example: Bar graphs are mostly used to compare
data for certain periods of time, such as monthly or
yearly.
.

Tabulation
Tabulation is the systematic arrangement of
the statistical data in columns or rows.
Tabulation
helps in drawing the conclusion from the
statistical figures. Tabulation prepares the
ground for analysis and interpretation.
In general, the tabulation is classified in two
parts: simple tabulation, and complex
tabulation.
Simple tabulation, gives information
regarding one or more independent
questions.
Complex tabulation gives information
ONE-WAY TABLE:
Info graphics
An info graphic (information graphic) is a
representation of information in a graphic format
designed to make the data easily understandable
at a glance. People use info graphics to quickly
communicate a message, to simplify the
presentation of large amounts of data, to see data
patterns and relationships, and to monitor
changes in variables over time.
Info graphics include bar graphs, pie charts,
histograms, line charts, tree diagrams, mind
maps, Gantt charts, and network diagrams. The
process of creating info graphics is sometimes
referred to as data visualization.
Power point
KEY ELEMENTS TO WRITE A REPORT
Avoiding redundancy
Keeping the length of the main part
Being sure to make a summary of evaluation
results
Using specific expressions, in simple manner,
emphasizing issues to be conveyed
Avoid using technical terms too often
LEARNING UNIT 3 – MAKE AN INFORMED
DECISION
Learning Outcome 3.1: Analyze and review
recommendations in line with the business goals
and identified specific problem.
Recommendation refers to a suggestion about what
should be done to improve the situation.
Recommendations analysis should be done in line with
the business goals and identified specific problem
by responding to the following questions:
 Are recommendations relevant?
 What are their implementation scenarios?
 Are recommendations effective?
 Are recommendations feasible?
1. Relevance:
 Are recommendations relevant or significant
to the business?
 Are those recommendations in line with the
business goals?
2. Implementation scenario:
a. Human resources:
Who should be involved in implementation of
recommendations?
What are the required skills.
b. Timeframe:
 In which period the recommendation will be
implemented?
 It refers to the time consideration including
deadlines given to the implementation of the
project.
C. Cost means and conditions:
What is the budget required to implement a
recommendation?
What are other additional resources the
business needs to effectively implement
recommendations?
d. Effect, impact:
 Are the recommendations going to help the
business in making a difference to the problem it
wanted to address?
3. Effectiveness:
 At which extent the recommendations will help
the business to achieve the specific objectives
set?
4. Feasibility:
 Are the recommendations realistically possible to
implement considering the available business
resources, government regulations, economic
situations, customer‘s needs, socio culture,
environment protection, and business ethics?
Learning outcome 3.2. Select the best
decision
3.2. 1.Decision making levels or
approaches/levels.
 Bottom-up decision-making
Bottom-up decision-making takes the opposite
approach of top-down decision-making. Instead
of setting goals before determining the process
to reach those goals and leaving organization
heads to make decisions on their own, input
from multiple levels is considered in the
decision making.
Example
Since services sector is driven by complexity and non-
linearity, decision making has to be done according to the
needs of the situation and the players involved in the decision
making process.
Top-down decision-making
Top-down decision-making identifies the desired outcome
or results of a BUSINESS before determining the process to
achieve those results.
This type of decision-making often accompanies a top-down
management style where the heads of an organization make
the decisions and pass them down to other members of the
organization to implement. (Top- down approach)
Example
Since manufacturing is all about set routines and machines,
the instructions have to be sent from the top since the
decision making as well as the implementation operates in
linear ways
In practice, organizations display a mix of
both decision making approach depending on
the nature of the decision to be taken.
Many organizations apply decentralized
structure in the belief that those closest to
the actions will make better decision.
2. Decision making process
Decision: choice made from available
alternatives
Decision making is the process of identifying
and selecting a course of faction/ activities to
deal with a problem or take advantage of an
important part of the entrepreneur‘s job.
By weighing options, the ranks are used to get
the best option. Different ranking methods
should be applied.
Example: a. 0 to 10
b. 5 to 1.
 Learning Outcome 3.3: Design implementation plan in
accordance with the decision made.
 Implementation plan refers to a cycle of steps taken to deliver
activities, outputs, results and impact while managing finances and
for risk.
 Implementation plan is a detailed listing of activities, costs, expected
difficulties and schedules that are required to achieve the objectives
of the strategic plans.
 3.3.1 Elements of implementation plan
 A business implementation plan may have the following
columns:
- Task: list of business activities
- Percentage Completed: lists the percentage of each task completed
- Status: task status such as: completed, on schedule, behind
schedule, cancelled
- Day Started: date task begun
- Day to be Completed: estimated date of task completion
- Actual Completion Date: date task was completed
- Task Assignment: Name of task owner
- Required resources: Budget
3.3.1 Elements of implementation plan
A business implementation plan may have the
following columns:
- Task: list of business activities
- Percentage Completed: lists the percentage of
each task completed
- Status: task status such as: completed, on
schedule, behind schedule, cancelled
- Day Started: date task begun
- Day to be Completed: estimated date of task
completion
- Actual Completion Date: date task was completed
- Task Assignment: Name of task owner
- Required resources: Budget
Gantt chart is one of the most used tools for
implementation plan
The basic purpose of a Gantt chart is to break a large
BUSINESS into a series of smaller tasks in an organized
way. The chart shows when each task should begin and
how long it should take. To draw up a Gantt chart, it must
follow these steps:
Step 1: List all activities in the plan. For each task, show
the earliest start date, estimated length of time it will take,
and whether it is parallel or sequential. If tasks are
sequential, show which stages they depend on.
Step 2: Head up graph paper with the days or weeks
through to task completion.
Step 3: Plot the tasks onto the graph paper. Next draw up
a rough draft of the Gantt chart. Plot each task on the
graph paper, showing it starting on the earliest possible
date. Draw it as a bar, with the length of the bar being the
length of the task. Above the task bars, mark the time
taken to complete them.
Step 4: Schedule activities. Now take the draft Gantt
chart, and use it to schedule actions. Schedule them
in such a way that sequential actions are carried out
in the required sequence.
Ensure that dependent activities do not start until the
activities they depend on have been completed. While
scheduling, ensure that you make best use of the
resources you have available, and do not overcommit
resource.
Step 5: Presenting the analysis. The final stage in this
process is to prepare a final version of the Gantt
chart. This should combine the draft analysis (see
above) with your scheduling and analysis of
resources.
This chart will show when you anticipate that jobs
should start and finish. In constructing a Gantt chart,
keep the tasks to a manageable number (no more
than 15 or 20) so that the chart fits on a single page
 Program Evaluation and Review technique
(PERT)
PERT is a planning and control tool. It schedules the
sequence pf activities to be completed in order to
accomplish a project within a short period of time. It
helps reduce both the time and cost of the project.
Steps involved in PERT : The following steps are
involved in PERT technique:
1. The activities involved in the project are drawn
up in a sequential relationship to show what activity
follows what.
2. The time required for completing each activity of
the project is estimated and noted on network.
3. The critical activities of the project are
determined
4. The variability of the project are determined
5. The variability of the project duration and
probability of the project completion in a given
time period are calculated.
Example: The above steps can be illustrated
with the following example. The managing
director of GWIZA Ltd is interested in getting
his operating budget prepared. The project is
decomposed into the following
activities
RISK MITIGATION PLAN
- Risk is defined as an event that has a
probability of occurring, and could have either
a positive or negative impact to a project
should that risk occur.
- Risk management is an ongoing process that
continues through the life of a project. It
includes processes for risk management
planning, identification, analysis, monitoring
and control.
- As part of documenting a risk, two other
important items need to be addressed:
- Mitigation steps that can be taken to lessen
the probability of the event occurring.
- A contingency plan or a series of activities that
should take place either prior to, or when the event
occurs.
- Mitigation actions frequently have a cost.
Sometimes the cost of mitigating the risk can exceed
the cost of assuming the risk and incurring the
consequences.
LEARNING UNIT 4 – CONDUCT BUSINESS
4.1: Plan for audit in line with the business needs
 4.1.1. Audit?
What is audit is an objective examination and
evaluation of the financial statements of an
organization to make sure that the records are a fair
and accurate representation of the transactions they
claim to represent. It can be done internally by
employees of the organization, or externally by an
outside firm
 TYPES OF AUDIT
1. Strategy audit
Involves assessing the actual direction of a business
and comparing that course to the direction required to
succeed in a changing environment.
it assesses how well the organization is internally
aligned to support the strategy, and how viable the
strategy is when compared to external market,
competitor and financial realities.
2. Management Audit
- It involves the review of managerial aspects like
organizational objective, policies, procedures,
structure, control and system in order to check the
efficiency or performance of the management over the
activities of the Company.
- It answers the questions:
―How well the management has been operating the
business of the company?
―Is managerial style well suited for business
operation?‖
3.Financial audit
- It is conducted to provide to provide an opinion
whether financial statements are fairly stated in
accordance with accounting standards, the auditor
gathers evidence to determine whether the statements
contain material errors or other misstatements.
4.Operational Audit
- It is a systematic review of effectiveness, efficiency and
economy of operation.
- It is a future-oriented, systematic, and independent
evaluation of organizational activities.
- In Operational audit financial data may be used, but the
primary sources of evidence are the operational policies
and achievements related to organizational objectives.
Quality audit
It is the process of systematic examination of a
quality system carried out by an internal or external
quality auditor or an audit team.
It can help determine if the organization complies
with the defined quality system processes and can
involve procedural or results-based assessment
criteria.
IT audit
- It is the examination and evaluation of an
organization's information technology
infrastructure, policies and operations. Information
technology audits determine whether IT controls
protect corporate assets, ensure data integrity and
are aligned with the business's overall goal.
4.1.2.Audit plan
Audit plan is the specific guideline to be
followed when conducting an audit. It helps
keep audit costs at a reasonable level, and
helps avoid misunderstandings with the
client. It addresses the specifics of what,
where, who, when and how.
OBJECTIVES OF AUDIT PLANNING
- Ensure that appropriate attention is
devoted to important areas of the audit.
- Ensure that potential problems are
properly identified.
- Ensure that the work is completed faster;
- Utilize the assistants properly and coordinate
the work done by other auditors and experts.
 Factors to be considered in audit planning.
 Planning his audit, the auditor will consider
the following factors:
 Complexity of the Audit.
 Environment in which the entity operates
 Previous experience with the client
 Knowledge of the client's business
 Discussion with Client
 Time
 Budget
 4.2: Review relevant documents and
consult with concerned people according
to audit plan.
 Identifying relevant business documents.
Auditors make a list of all relevant documents
they will need during the audit according to the
objective of the audit.
 Requesting relevant business documents.
The existing business documents are reviewed
to clarify whether company‘s activities are
thoroughly documented. Shortcomings and
weaknesses in the existing materials are
identified.
 General ledger
2. Trial balance
3. Copies of loans, leases and material contracts
4. Loan statements
5. Listing of all new fixed asset purchases with
invoices
6. Depreciation schedule
7. Board minutes for all years under audit and
through the current date
8. Payroll reports, if any
9. Stock Subscription and stock option
agreements
10. Names and contact information for any
attorneys used and stock transfer agent.
11. Articles of incorporation and by-laws
12. Listing of all bank accounts, including bank
name, account number and
authorized signers
13. Business plan
14. Strategic plan
15. Policy and procedure manuals
Characteristics of an auditor.
1. Impressive organization skills: As a risk
and compliance superstar, an auditor should
be able to develop clear goals of what is
required within your audit work, as well as
the expertise to fulfil these obligations.
2. A thirst for knowledge: An auditor must
always strive to cultivate a deep knowledge
of his/her company including its culture, key
players and competitive environment.
3. A passion for problem solving: Risk
management jobs require precision thinking,
accurate reporting and statistical analysis to
ensure the integrity of the auditing process.
4. Communication/People skills. The ability to
read people and adapt to any given situation is a
strong driver in those who progress up the internal
or external auditing career ladder quickly.
5. Innovation: Every organization has its own
inner workings and to be a successful auditing
manager or compliance officer requires creativity.
Combine innovation with current business
processes to yield impressive
results.
CONSULTING WITH CONCERNED PEOPLE.
Auditors interact with concerned individuals for
more clarification on some issues encountered
during the documents review for more opinions,
depending on the objective of the audit.
Meeting with concerned people
An example is during the strategic audit where an
auditor organize an interview with the
management team through individual interviews.
 Differences in opinions and priorities of the
future development of the company are
identified.
 The written business plan is compared with the
management teams‘ individual opinions.
New ideas and concepts not documented in
the business plan are noted for possible
additions to
the business plan.
The individual interviews are made in
confidence and the results are presented
anonymously.
Seeking for clarification on identified
issues
Auditors may contact the concerned person for
more clarification. During this meeting, an
auditor is
specific for the needed information and notes
the feedback.
Examples:
1- The auditor can contact the customer care
manager, for a complaint records which does
not show its date, and the date of the feedback.
2- The auditor can contact also the accountant,
for missing documents in the process of invoice
payment.
Points to consider in seeking for
clarification
 Asking clear and concise questions;
 Using open or closed questions appropriately;
 Listening actively and effectively; and
Considering the interviewee's responses
Exercises: "As an auditor, you find out some
inconsistencies in financial documents
presented by an accountant to you during
their review and you would like to meet with
her/him for more clarification”. Play this role.
4.3: Analyze business logic to match the
established standards.
4.3.1.Business model canvas.
The Business Model Canvas is a strategic
management tool that lets you visualize and
assess your business idea or concept. It’s a
one-page document containing nine boxes that
represent different fundamental elements of a
business.
The business model canvas beats the
traditional business plan that spans across
several pages, by offering a much easier way
to understand the different core elements of a
business.

The business model canvas was originally

developed by Alex Oster alder and Yves
Pigneur and introduced in their book
‘Business Model Generation as a visual
framework for planning, developing and testing
the business model(s) of an organization.
Purpose:
The purpose of the business model canvas
could be described as simplicity. The beauty of
the business model canvas is that it brings all
the essential information about the business
together and lays it out logically on a single
sheet of paper or canvas.
The importance of business model canvas is
that it offers a high-level analysis, provides
important insights, and a greater
understanding of your venture, all while
avoiding getting bogged down in the details.
4.3.3.Basic components.
1. Customer Segments
2. Value Propositions
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resources
7. Key Activities
8. Key Partners
9. Cost structure
Steps involved in designing Business model
canvas.
The Business Model Canvas template consists of 9
different components that you will have to think about
and define as concretely as possible. Below, we briefly
explain each of the components:
1.Customer segments – Your target audience. Who
are the key customers or users of your business? Who
are you solving a problem for? What do they do? What
draws them to you?
2.Value proposition – What are you offering the
customer/client/user? What are your products and
services? What problem(s) and specific pain points do
they address? What is unique about your business? Why
would your target market turn to you rather than the
competition? How can they distinguish between you?
3.Revenue streams – Where does (or will)
your business’s revenue come from? How
exactly will you capitalize on the value you are
providing? Direct sales? Pay per product or pay
per view? A freemium model? Licensing?
Subscription?.
4.Channels – How do you reach out and
connect with your customers? How exactly do
your customers come into contact with your
business? How are you communicating your
value proposition? This includes both physical
(bricks & mortar store, sales reps, face-to-face
networking, etc.) and digital channels (website,
mobile app, cloud platform, social media, etc.)
5.Customer relationships – What are the key
relationships, and how do you maintain them?
Having attracted clients and customers, how do
you plan to retain them? How do you nurture your
customer/client relationships?
6.Key activities – What are the daily activities
that keep your business (and business model)
running? What is it you actually do to deliver your
value proposition.
7.Key resources – What do you use to run your
business – people, knowledge and skills, office
space, the internet, intellectual property, budget,
etc. What resources are necessary to keep
running?
8.Key partners – Who are the people and
institutions without whom your business
wouldn’t run? These might be other companies,
joint venture partners or collaborators,
suppliers, holding companies or subsidiaries,
strategic alliances, or other third parties. Who
else do you rely on to deliver your value
proposition?
9.Cost structure – What are the costs of
running your business model? Consider
production or manufacturing costs, the
physical space your business occupies (if any),
research & development, marketing and sales,
legal costs, etc. Are these costs fixed or
variable?
4.3.2.Making business benchmarking.

Benchmarking is the process of comparing your own

organization, its operations or processes against other
organizations in your industry or in the broader marketplace.
Benchmarking can be applied against any product, process,
function or approach in business.
Why benchmarking is important?
Benchmarking helps companies learn about improving their
business practices by observing what other companies do.
Benchmarking can help businesses reduce costs, increase
profits, strengthen customer loyalty and satisfaction.
Companies can learn from business practices from of
internal teams, competitors within their industry or
companies operating in completely unrelated sectors.
How Benchmarking Works
The intent of benchmarking is to compare your
own operations to that of competitors and to
generate ideas for improving processes,
approaches, and technologies to reduce costs,
increase profits and strengthen customer
loyalty and satisfaction. Benchmarking is an
important component of continuous
improvement and quality.
 4.4: Report audit findings and
recommendations to the management
team.
4.4.1.Audit report procedures.
Audit findings and audit recommendations
formulation the audit findings and
recommendations are always included in the
whole audit report content. In other words,
they are parts of an audit report.
Guidelines for audit report content
A u d it T it le  Title should be clear, concise and reflect the content of the audit.
Authors  Business name, name(s) of staff who have been involved in the audit and who
can verify the contents of the report.
S p e c ia lt y , D iv is io n  Include details of Specialties, department and disciplines of all authors
and disciplines
D a te o f r e p o r t  D a te th a t th e r e p o r t w a s c o m p le te d .
A c k n o w le d g e m e n ts  For instance, data collectors or respondents input into questionnaires.
A b s t r a c t /S u m m a r y  Not required for all audits but can be a useful way to summarise information
in an easy to read manner, especially if the report is lengthy.
D e c la r a t io n  Auditors‘ responsibilities
I n t r o d u c t io n  I n c lu d e reaso ns for c h o o s in g th e a u d it to p ic and som e b ack g ro u n d
in f o r m a tio n to th e to p ic , in c lu d in g e x p la n a tio n o f te r m in o lo g y if a p p r o p r ia te
a n d c u r r e n t w o r k in g p r a c tic e .
Audit Objective  Give a clear definition of the focus of the audit. i.e Objectives should be
SMART (specific, measurable, achievable, realistic and timely).
Audit Standard  G iv e th e f u ll title a n d d a te o f th e g u id e lin e , p o lic y o r p r o to c o l a g a in s t w h ic h
y o u a r e a u d itin g .
 T h e g u id e lin e /p o lic y s h o u ld b e u p to d a te a n d in u s e in c u r r e n t p r a c tic e . T h e
c r ite r ia f r o m th e g u id e lin e o r p r o to c o l th a t y o u c h o o s e to a u d it s h o u ld b e
m e a s u r a b le a n d th e s ta n d a r d ( % ) s e t e x p lic it.
 W h e r e y o u a r e a u d itin g a g a in s t n u m e r o u s c r ite r ia f r o m th e g u id e lin e /p o lic y
h ig h lig h t th e m o s t im p o r ta n t to a llo w th e r e s u lts to b e r a te d u s in g th e R A G
( r e d , a m b e r , g r e e n ) r a tin g s y s te m .
Method and sample Specify method used in audit process. This include:
 C r ite r io n b a s e d a u d it
Characteristics of good recommendations.
 Should be constructive: recommendations
should offer solutions instead of just identifying
problems.
 Specific: Be specific when writing
recommendations , both about the areas that are
done well and areas that need improvement.
 Measurable: Recommendations should be
measurable so that it will be evident when
changes have been made.
 Sensitive: Keep recommendations and comments
on a positive note and avoid any negativity
 Balanced: Remember to point out strengths as
well as weaknesses
4.3.2.TYPES OF AUDIT REPORT.
Audit report is classified according to conclusions
drawn after auditing process.
1. Clean Report or Unqualified Opinion
A clean report means the auditors found no issues
with the company’s financial reports, and the
company is in full compliance with GAAP(he
generally accepted accounting principles )
guidelines. It’s also referred to as an “unqualified
audit opinion” example, because the auditors
conclude the company does not need to adjust or
correct anything to improve its financial status.
This kind of report shows the auditors are satisfied with
the company’s financial performance. Therefore, once
the report is released to the public, investors and other
interested parties consider it positive news on the
company.
2. Qualified Report or Qualified Opinion
If the company’s financial reporting doesn’t comply with
the GAAP guidelines, auditors may have no choice but to
give a qualified opinion. It’s almost similar to an
unqualified opinion except for the statement that shows
the company is not compliant with GAAP.
It shows the different areas where the company can
improve and the qualifications it must meet for standard
financial reporting practices. Companies use qualified
reports to identify areas that need fixing so they can
improve their financial status.
Investors view a qualified opinion as a negative mark
on the company and may refrain from investing in a
company.
3. Disclaimer Report or Disclaimer of Opinion
The company must allow the auditors to access their
financial records without any restraints for an effective
auditing process. However, if the auditor feels the
company limited their access or they couldn’t get
satisfactory answers to any of their questions during
the audit, they may give a Disclaimer Report.
Basically, a disclaimer report distances the auditor
from reporting on the company’s financial status as
they cannot issue a definitive opinion. This could help
to protect the auditor’s reputation in case the
company faces a legal issue.
A disclaimer of opinion example would be
where the auditor states the reason for their
opinion as “inability to obtain sufficient and
appropriate audit evidence as a basis of an
audit opinion.”
4. Adverse Audit Report or Adverse
Opinion
An adverse audit report shows the company is
not compliant with any of GAAP’s guidelines for
financial reporting and therefore portrays
gross misstatements on their assets and
liabilities. In this kind of audit report, the
auditors discover instances of financial
misappropriation and other irregularities, as
An adverse report highlights potential fraud in
the company and alerts investors and other
business entities to avoid it. On the other hand,
the report offers the company an opportunity to
improve its practices and address the
underlying issues.
4.3.3.AUDIT REPORT PRESENTATION.
Your presentation should get the message(s) of
your clinical audit project across to key staff,
generate
discussion and then agreement about changes to
practice (in light of the audit it results).
Presentations should be punchy‘ in style,
compared to audit reports.
 Group assignment LU4

1.“As an auditor, you find out some

inconsistencies in financial documents
presented by an accountant to you during their
review and you would like to meet with her/him
for more clarification”. Play this role.

2.Explain different types of business models.