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Case Study #5 - Audit Engagement - Operational Safety Audit AFR Manufacturing Companys senior management asked the internal
A. Based on the scenario presented above: 1. Clearly state the internal audit engagement objective. 2. Prepare two well-writt
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Answer #1

1. Internal Audit Engagement Objective: This engagement is conducting an operational safety audit for the metal drill press unit. The audit committee's objectives is to assess whether the company's equipment operation fulfills the safety policies of the company.

2. Audit Observations:

Conditions: Following conditions represent the current state of the company:

  • The drill bits were not maintained in good condition. It was very dull and there was very less supply of the drill bits.
  • The knee switches were not in the right position.
  • The machine operators were not wearing protection equipments.

Criteria: Following criteria represent the correct state of the company:

  • Following accessories should be worn by operators mandatorily:

a) Safety glasses

B) Ear plugs

c) Protective glasses

Consequences: following are the consequences of the existing conditions and the criteria:

  • Five injuries are sufferred due to non-adhering to safety policies.
  • The company sufferred a big loss during the 6 months period.
  • Overall reduction in productivity and company's revenue.
  • The company incurred huge medical expenses and lawsuits facing due to injuries.

Causes: Following are the reasons for the condition and consequence of the condition:

  • The company did not maintain proper procedures to maintain the equipment.
  • The company is not concerned about the personnel safety and other employees.
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