Republic of the Philippines

BATANGAS STATE UNIVERSITY

Pablo Borbon Main Campus I
Rizal Avenue, Batangas City

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

INTERNATIONAL HOSPITALITY MANAGEMENT
Accountancy and Management Accounting Department

COURSE SYLLABUS WITH SPECIFICATION

UNIVERSITY VISION

A premier national university that develops leaders in the global knowledge economy.

UNIVERSITY MISSION

A university committed to producing leaders by providing a 21st century learning

environment through innovations in education, multidisciplinary research, and community
and industry partnerships in order to nurture the spirit of nationhood, propel the national
economy, and engage the world for sustainable development.

COURSE CODE: ACC 314

COURSE TITLE: OPERATIONS AUDITING

PREREQUISITE: ACC 310

CREDIT UNIT : 3 units

ACADEMIC YEAR: 2020-2021

REFERENCE CMO: CMO No. 27 Series of 2017

PROGRAM EDUCATIONAL OBJECTIVES

The Bachelor of Science in Accountancy graduates are expected:
1. Resolve business issues and problems with a global and strategic perspective using
knowledge and technical proficiency in the areas of financial accounting and reporting,
cost accounting and management, accounting and control, taxation and accounting
information systems.
2. Conduct accountancy research through independent studies of relevant literature and
appropriate use of accounting theory and methodologies.
3. Employ technology as a business tool in capturing financial and non-financial
information, generating reports and making decisions.
4. Apply knowledge and skills that will successfully respond to various types of
assessments (including professional licensure and certifications).
5. Confidently maintain a commitment to good corporate citizenship social responsibility
and ethical practice in performing functions as an accountant.

PHILOSOPHY
This course focuses primarily on internal auditing that determines the reliability of
financial and operational reporting, assesses the economy, efficiency and effectiveness of
operations; and verifies the proper use of and safeguarding of the organization’s assets. It
provides knowledge on how internal auditors verify the internal control are operating as
intended and determine if processes are efficient and support organizational objectives.
The students are expected to learn the fundamentals of operational auditing, including the
key requirements needed to conduct an effective operational review, gain understanding of
management practices and discover how to determine if they help or hinder the
achievement of the organization’s objectives

AUDIENCE
The course is intended for students taking up Bachelor of Science in Accountancy enrolled
under ACC 314 Operations Auditing who have finished the course ACC 310 Auditing and
Assurance Principles.

STUDENT OUTCOMES
Students of BS Accountancy should be able to:
a. Record financial transactions in compliance with generally accepted
accounting and reporting standards (both global and local) for sole
proprietorships, partnerships, corporations, government and not-for-
profit organizations.
b. Prepare Accountancy reports such as budgets and business plans using
appropriate framework.
c. Conduct financial and operational audits of all types of business 
enterprise and not-for-profit organization.
d. Prepare individual and corporate income tax returns and basic tax
planning in compliance with legislations and regulations.
e. Perform cost-benefit analysis for management decisions.
f. Design and implement a management control system and performance
system.
g. Communicate effectively the results of financial analysis.
h. Design an appropriate research plan.
i. Prepare a critical review of related literature.
j. Analyze results of study and discuss implications and contributions to
body of knowledge.
k. Present findings and conclusions of the study.
l. Communicate effectively the recommendations.
m. Customize accounting software to a particular business entity.
n. Develop a financial model using spreadsheet software.
o. Analyze the performance of a particular business entity using
appropriate accounting software tools and functions.
p. Perform accounting-related work in actual workplace based on pre-set
standards.
q. Pass licensure examinations or qualify for professional accreditations/ 
certifications.
r. Promote adherence to legitimate and acceptable ethical objectives of an 
organization.
s. Communicate limitations or other constraints that would preclude
responsible judgment or successful performance of an activity such as
in the practicum or on-the-job training.

INTENDED LEARNING OUTCOMES

After completing this course, students will be able to:
1. Identify how the changing business environment has influenced past trends in
operational auditing and examine key skill sets and knowledge essentials
associated with a trusted advisor.
2. Review key aspects of the project planning process that promote the successful
outcome of operational audit engagements and describe operations objectives and

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 the drivers of associated risks, measures of risk events, design of operations-
focused controls, and criteria to evaluate operational performance.
3. Discuss the application of business process improvement methods and tools during
an operational audit and define the different types of benchmarking and
measurement criteria
4. Explain how benchmarking methodology can be used during an operational audit
and discuss different reporting approaches and persuasive strategies to attain
management’s buy-in to results and solutions.

RELATIONSHIP TO STUDENT OUTCOMES

Mapping Intended Learning Outcomes vs Student Outcomes

Intended Applicable Student Outcomes
Learning
Outcomes A b c d e
ILO1     
ILO2     
ILO3     
ILO4    

SPECIFIC OBJECTIVES
After completing each topic, students will be able to:
ILO ILO ILO ILO
TOPICS 1 2 3 4
I. APPROACHES TO OPERATIONAL AUDITING
 Definitions of “Operational Auditing
 Scope
 Audit Approach to Operational Audits

 Resourcing the Internal Audit of Technical Activities
 Productivity and Performance Measurement Systems
 Value for Money (VFM) Auditing
 Benchmarking
II. BUSINESS PROCESSES
 Introduction
 An Audit Universe of Business Processes
 Self-Assessment of Business Processes
 A Hybrid Audit Universe
 Reasons For Process Weaknesses
 Identifying the Processes of an Organization

 Why Adopt a “Cycle” or “Process” Approach to Internal
Control
 Design and Review?
 Business Processes in the Standard Audit Programme
Guides
 The Hallmarks of a Good Business Process
 Academic Cycles in a University
III. DEVELOPING OPERATIONAL REVIEW
PROGRAMMES FOR MANAGERIAL AND AUDIT
USE
 Scope 
 Practical Use of SAPGs
 Format of SAPGs
 Risk in Operational Auditing

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IV. GOVERNANCE PROCESSES
 Introduction
 Internal Control Processes being Part of Risk Management
Processes
 Risk Management Processes being Part of Governance
Processes
 Objectives of Governance, Risk Management and Control
Processes
 The COSO View of Objectives 
 Should there be a Single Set of Objectives?
 The Internal Governance Processes
 The Board and External Aspects of Corporate Governance
 The Board’s Assurance Vacuum
 Risk and Control Issues for Internal Governance Processes
 Risk and Control Issues for the Board
 Risk and Control Issues for External Governance
Processes
V. RISK MANAGEMENT PROCESSES
 Introduction
 Objectives of Risk Management
 Essential Components of Effective Risk Management
 The Scope of Internal Audit’s Role in Risk Management

 Tools for Risk Management
 The Risk Matrix
 Risk Registers
 Risk Management Challenges
 Control Issues for Risk Management Processes
VI. INTERNAL CONTROL PROCESSES
 Introduction
 COSO on Internal Control
 Turnbull on Internal Control
 COCO on Internal Control
 A Systems/Cybernetics Model of Internal Control
 Control by Division with Supervision 
 Control by Category
 The Objectives of Internal Control
 Determining Whether Internal Control is Effective
 Control Cost-Effectiveness Considerations
 Issues for Internal Control Processes
VII. REVIEW OF THE CONTROL ENVIRONMENT
 Introduction
 Control Objectives for a Review of the Control
Environment 
 Risk and Control Issues for a Review of the Control
Environment
 Fraud
VIII. REVIEWING INTERNAL CONTROL OVER
FINANCIAL REPORTING—THE SARBANES-
OXLEY APPROACH
 Introduction

 Costs and Benefits
 2007 SOX-LITE
 Revised Definitions of “Significant Deficiency” and
“Material Weakness”

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  Using a Recognized Internal Control Framework for the
Assessment
 Risk and Control Issues for the Sarbanes-Oxley s. 302 and
s. 404 Compliance Process
IX. BUSINESS/MANAGEMENT TECHNIQUES AND
THEIR IMPACT ON CONTROL AND AUDIT
 Introduction
 Business Process Re-Engineering
 Total Quality Management 
 Delayering
 Empowerment
 Outsourcing
 Just-In-Time Management (JIT)
X. CONTROL SELF ASSESSMENT
 Introduction
 Survey and Workshop Approaches to CSA
 Selecting Workshop Participants
 Where to Apply CSA
 CSA Roles for Management and for Internal Audit
 Avoiding Line Management Disillusionment
 Encouragement from the Top Facilitating CSA
Workshops, and Training for CSA

 Anonymous Voting Systems
 Comparing CSA with Internal Audit
 Control Self-Assessment as Reassurance for Internal Audit
 A Hybrid Approach—Integrating Internal Auditing
Engagements with CSA Workshops
 Workshop Formats
 Utilizing CoCo in CSA
 Readings
 Control Self-Assessment
XI. EVALUATING THE INTERNAL AUDIT ACTIVITY
 Introduction
 Ongoing Monitoring
 Periodic Internal Reviews
 External Reviews
 Common Weaknesses Noted by Quality Assurance 
Reviews
 Internal Audit Maturity Models
 Effective Measuring of Internal Auditing’s Contribution to
the Enterprise’s Profitability
 Control Objectives for the Internal Audit Activity

TEACHING LEARNING STRATEGIES AND ASSESSMENT METHODS

Teaching and Learning Strategies

1. LECTURE. Lecture method shall be the primary teaching strategy to be considered in
the class. The class shall be provided with learning modules for the semester. Lecture
shall be done through the aid of classroom smart televisions, projectors and video
presentations. Computer-aided instruction shall likewise be utilized to develop the
students’ abilities through the use of IT.
2. PROBLEM SOLVING. Students are presented with problems which require them to
find solutions using the concepts learned during the class. It is a student-centered
strategy which requires students to become active participants in the learning process.

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 This includes exercises solved during classes and assignments to be submitted
individually by the students.
3. PEER TEACHING / COOPERATIVE LEARNING. Students who works in groups
perform better on tests, particularly in regard to reasoning and critical thinking skills
(Lord, 2001). Having students work with each other is an effective methodology
because it forces students to be active learners and to talk through course concepts in
their own words. The faculty shall encourage tutorials and think-pair-share. To evaluate
the performance of students in cooperative learning, each member shall evaluate other
members.
4. CASE STUDY METHOD. Providing an opportunity for students to apply what they
learn in the classroom to real-life experiences has proven to be an effective way of both
disseminating and integrating knowledge. The case method is an instructional strategy
that engages students in active discussion about issues and problems inherent in
practical application. It can highlight fundamental dilemmas or critical issues and
provide a format for role playing ambiguous or controversial scenarios. Every time that
there will a case study, the format will be as follows:

5. SEMINARS/ TRAINING / WORKSHOPS / SIMULATIONS. Students are highly

encouraged to attend seminars which will further improve their knowledge and
understanding of the subject. It will be the perfect medium to bridge the gap between
theories and practices. Brainstorming and workshops in preparing organizational-
behavior activities including team buildings shall be conducted during the semester to
let the students apply the knowledge learned from classroom discussions. The best
workshop outputs shall be utilized by the class and shall likewise be simulated in a day-
long team building activity. Through a series of planned team bonding events that are
fun and motivational, teams build skills like communication, planning, problem-
solving and conflict resolution.

Assessment Strategies

RUBRIC FOR CASE PRESENTATION

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COURSE REQUIREMENTS
The following requirements should be complied to pass the course:
1. Regular Attendance
2. Active Class Participation (recitation, board works and other classroom activities)
3. Seatwork’s and Homework’s (problem sets or problem solving exercises and including
library research works)
4. Quizzes
5. Major Examinations
6. Workshops / Simulations
7. Case studies and Research Output

Quizzes and Major Examinations

There will be four major examinations: Prelim, Midterm, Semi-final and Final. All
major examinations will be in-class and closed notes and will be administered on the
schedule given by the University. Special examination shall be given only in case of
excused absence or conflict of examination schedule. Unless otherwise specified by the
instructor/professor, the scope of major exam shall be those topics for the given period
listed in the course calendar. There will also be quizzes from time to time which may be
announced or unannounced, closed notes or open notes, in-class or take-home.

Oral and Written Report

Activities give students an opportunity to more deeply engage in the assigned
material. A secondary purpose is to encourage regular readings of the text which prevents,
last-minute cramming before tests, enhances class discussions and help students better
understand class lectures. Papers are worth different point values depending on the amount
of work required. The students will be exposed to various aspects of human behavior and
this will in turn require reflective/critical thinking which will be expressed in writing.

Seatwork/Homework
Seatwork and homework will be given to help students fully understand the
concepts being presented in the class. These shall be submitted in due time and in proper
format to be told by the instructor/professor upon the giving of seatwork or homework.
Late submission shall mean 20% deduction from the raw score. There will be
seatwork/homework to be done individually. There will also be group
seatwork/homework; groupings of which shall be administered by the instructor/professor.

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Class Participation
From time to time, a graded recitation will be conducted in order to test whether the
students really understand their lessons. Likewise, the students are expected to participate
actively in the class discussions and are encouraged to share their thoughts and prove or
disprove other’s conviction in proper manner. This way, their thinking and reasoning will
be developed to the fullest. Further, the student’s communication skills will be improved.
The class will be grouped accordingly and will be given specific topics to research and
report inside the class. Group exercises will likewise be given to reinforce the learning
process. Furthermore, the class will be encouraged to attend different seminars and for
related to the subject.

COURSE POLICIES
The following items are given as a guide in the conduct of the course:

Grading System
Computation of the final grade will be based on the following:
Major Requirements
Midterm Examination - 20%
Final Examination - 20%
Semestral Output - 10%
Total - 50%
Other Requirements
Long Quizzes - 20%
Short Quizzes - 10%
Exercises - 10%
Class Participation - 10%
Total - 50%
Total: 100 %

Raw Score
Transmuted Grade =  62.5  37.5
Total Possible Score

The computed grades will be transmuted base on the following ranges:

Numerical Percentage
Description
Grade Equivalent
1.00 98-100 Excellent
1.25 94-97 Superior
1.50 90-93 Very Good
1.75 88-89 Good
2.00 85-87 Meritorious
2.25 83-84 Very Satisfactory
2.50 80-82 Satisfactory
2.75 78-79 Fairly Satisfactory
3.00 75-77 Passing
5.00 Below 75 Failure
Inc *Incomplete
Drp Dropped

Students who will get a grade of 70-74 must be given a removal examination. A grade of
“3.00” will be given to those who will pass the removal examination and those who will
fail will be given a grade of “5.00”.

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*A grade of “Incomplete” must be complied with by the student within one (1) semester
or one hundred fifty (150) days. A student who fails to complete the deficiency/deficiencies
at the end of the succeeding semester shall automatically obtain a grade of 5.0 in the course.

Attendance
Prompt and regular attendance of students is required. Total unexcused absences
shall not exceed ten (10) percent of the maximum number of hours required per course per
semester, (or per summer term). A semester has 18 weeks. For example, a semestral subject
with
 3 units (3 hrs lec), 10% x 3 x 18 = 5.4 hrs or 6 hrs.
 3 units (2 hrs lec, 3 hrs lab), 10% x 5 x 18 = 9 hrs.
 5 units (3 hrs lec, 6 hrs lab), 10% x 9 x 18 = 16.2 hrs or 16 hrs.

Students exceeding six class hours of absences before Midterm Examination shall be
dropped from the class roll; they shall be given a failing grade if such absences are incurred
after the Midterm Examination. Please refer to the provisions in the Norms of Conduct for
the full text of guidelines for the attendance.

Missed Exams
No special or make-up examination will be given except for those whose absence
is excused. In case of excused absence, a valid written excuse signed by the parent/guardian
and the dean must be presented to the instructor.

Academic Dishonesty
Academic misconduct or dishonesty is a serious offense and student-offender will
be subjected to disciplinary action and punishment. This includes plagiarism, any form of
cheating in examination, falsification of documents, misrepresentation in exam or class
activity, and similar acts. Such acts are considered major offenses and will be dealt with
according to the University’s Student Norms of Conduct. Punishment for such offense
includes non-readmission, suspension, failure in the course/subject, grade of zero in the
exam/requirement, among others.

Dropping
Dropping must be official by accomplishing dropping form and submitting it at the
Registrar’s office before the midterm examination. Students who officially drop out of
class shall be marked “Dropped” whether he took the preliminary examination or not and
irrespective of their preliminary grades. A student who unofficially drops out of class shall
be given a mark of “5.0” by the instructor.

Consultation
Student may consult the faculty during his/her consultation hours as indicated in
the schedule.

Classroom Rules and Regulations

Students attending the class session are expected to be always prepared and ready to
participate to class discussions and activities. They shall also behave properly so that the
teaching and learning process will not be interrupted. The following shall be observed
during the conduct of classes:
 Cleanliness and orderliness of the classroom must be maintained.
 Eating, drinking, chewing gums, smoking, and playing any game are not allowed.
 Mobile phones and other electronic gadgets must be turned off.
 Unnecessary talking with seatmates; reading newspapers, magazines, pocketbooks
and the like; using mirror, comb, hair brush and the like; putting make-up, powder,
lipstick and the like are prohibited.
 Going in and out of the room must be minimized.

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  During examinations, students are not allowed to bring with them, anything except
pen, eraser and calculator. You are not permitted to borrow these things from your
classmates around you for this may be a cause of cheating. Exams will commence
and end on the scheduled time. Latecomers will not be given any consideration
unless valid reason.
 Make-up tests will be given for authorized university activities only if a student
present suitable documentation (evidence) explaining the absence to the instructor.
The instructor/university reserves the right to disapprove any explanations for
absences presented without prior notice and not to provide the opportunity for a
make-up test. Students knowing they will be absent from an announced test because
of personal or business reasons are required to inform the instructor before the
absence. A make-up test may be given early in some cases.

ACADEMIC INFRASTRUCTURE

Textbook:
1. Chambers, et al. Operational Auditing, 2019 Edition. Operational Auditing,
Manila: John Wiley and Sons, Ltd,

References
1. Bailey, A. D. Jr. 2014. Perspectives on the Public Company Accounting Oversight
Board (PCAOB) 2004-2005. Accounting Horizons (December): 889-899
2. Bardhan, I., S. Lin and S. Wu. 2015. The quality of internal control over financial
reporting in family firms. Accounting Horizons (March): 41-60
3. Kapoor, G. and M. Brozzetti. 2012. The transformation of internal auditing:
Challenges, responsibilities, and implementation. The CPA Journal (August): 32-
35.
4. Murdock, H. 2017. Operational Auditing, Principles and Techniques for a
Changing World. United Kingdom: Auerbach Publications

COURSE OUTLINE
The following is a tentative list of topics for the course. The instructor has the right
to alter the outline at any time due to time constraints, unexpected scheduling conflicts,
unexpected affairs/activities in the university, or overall benefit to class effectiveness.

Week No. Topics Teaching Strategies

Orientation (Discussion of Syllabus
including: University Vision,
Mission, Goals and Objectives.
Lecture on brief introduction
1 Quality Policy, Course Requirements,
of the course subject
and Course Outline, Grading
System); and Approaches to
Operational Auditing;
Business Processes; Developing Lecture, Recitation, Activity,
Operational Review Programs For Quiz, Group Discussion,
2-4
Managerial and Audit Use; Case Study, Group
Governance Processes Discussion
5 Long Quiz
Risk Management Processes; Internal Lecture, Recitation, Activity,
Control Processes; Review of the Quiz, Group Discussion,
4-7
Control Environment Case Study, Group
Discussion
8 Midterm Examination
Reviewing Internal Control over
Lecture, Recitation, Activity,
9-11 Financial Reporting—the Sarbanes-
Quiz, Group Discussion,
Oxley Approach;

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 Business/Management Techniques Case Study, Group
and Their Impact on Control and Discussion
Audit
12 Long Quiz
Lecture, Recitation, Activity,
Control Self-Assessment; Evaluating Quiz, Group Discussion,
13-15
the Internal Audit Activity Case Study, Group
Discussion
16 Final Examination

Prepared by:

DANIEL JOHN F. FALO, CPA, MBA

Instructor, ACC 313
Date signed: January 23, 2021

Reviewed by:

MA. CONCEPCION P. MANALO, CPA, MBA

Dept. Chair, Accountancy and Management Accounting
Date signed:

Approved by:

DR. BENDALYN M. LANDICHO

Dean, CABEIHM
Date signed:

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