September 17, 2013
By Salvatore J. Armao, CPA/PFS, CFP, CFE
You’ve had your financial statements audited or reviewed. So now you feel confident that your organization is operating efficiently, is protected from misappropriation of assets and serious accounting errors and that you are in compliance with government filing requirements and regulations. Maybe not.
In addition to the recurring annual audit or review of your organization’s financial statements, you should consider having an operational review. Why?
An operational review goes beyond the traditional audit of books and records.
· It looks at the entire operation of the organization and how information flows through from outside third parties to the organization and into the books and records.
· It looks at the efficiency of internal policies and procedures or the lack thereof.
· It analyzes all employees’ duties and responsibilities from the CEO to the mail room clerk.
· It is an in-depth look at the controls that are in place to protect assets or the need to strengthen them.
· It determines if the organization’s proper government filings are being prepared – and if they are prepared properly.
Naturally, there is much more work required to perform an operational review as compared to a standard financial statement audit. However, the benefits to the organization will far offset the cost of the service.
With regard to their understanding of their duties and responsibilities, along with other inquiries. This usually will highlight trouble spots in the organization and any weaknesses that exist. Computer hardware and software will be reviewed, as well as all administrative policies and procedures. Even the work environment and physical workspace will be evaluated.
The benefits that can come into effect from this professional service can include:
· Improvement of internal operating efficiency by the elimination of inefficient procedures and duplication of effort.
· The creation of more efficient internal procedures, strengthening of internal accounting controls, improved record-keeping and elimination of unproductive tasks and personnel.
· The strengths and weaknesses of the organization will be identified so that they can be addressed by management in a timely manner.
Every organization should consider having a periodic operational review. In every case where we have provided this service for our clients, the benefits have far outweighed the expenditure associated with the review.
Armao LLP is committed to providing labor unions and employee benefit funds with accounting, auditing, tax, financial, wealth management and advisory services. Visit us at www.armaollp.com. Mr. Armao can be reached at 516.320.7200 or sarmao@armaollp.com.
