The Auditing Process - Applied.

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University Degree Business and Administrative studies

The Auditing Process - Applied

Abstract

        The traditional audit or assurance process associated with the assessment of financial records has diffused into other professions.  In essence, auditing functions carried out by Road Authorities shares a number of similarities to that used by a traditional external auditor. The differences between the traditional audit and a road safety audit lies in the nature of the audit process.  

Introduction

Traditionally, the audit process was linked to the checking of financial accounting records and reports.  Over the past decade, however, road authorities have also adopted an audit function to increase the safety of road users. The objectives of the audit determine the nature of the audit process and the criteria used by an auditor to form and express an opinion.

 The Diffusion of the Audit Process Across Professions

Malcolm Bulpitt developed roadway audits in the United Kingdom in the 1980s. Road Safety Audits were introduced in the State of New South Wales, Australia, in 1990, when the audit of the Pacific Highway used specially prepared checklists. In 1994, the Austroads guide Road Safety Audit was published.

A Road Safety Audit (RSA) as defined by Austroads is:

A formal examination of an existing or future road or traffic project, or any project that interacts with road users, in which an independent, qualified examiner looks at the project's accident potential and safety performance.

‘Audits are an essential component of an overall safety culture and management system that commits each person -- planner, designer, constructor, and operator -- to assume responsibility for his actions’.

The objective of a road safety audit (RSA) is ‘to proactively manage road safety by attending to potential hazards in the road environment before they result in a crash’ and thus ensuring the safety of all road users.  The traditional audit’s objective is to provide a high level of assurance that the reports prepared by management represent a ‘true and fair view’ of the company’s operations and financial status. In essence, both audits have similar objectives.  Whilst a traditional audit provides stakeholders and other interested users, a high level of assurance that the audited company is operating in accordance to accounting and ethical standards, a road safety audit provides road users a high level of assurance that the roads they are travelling on are in accordance to road safety standards.  More importantly, the credibility of the opinions expressed by auditors is enhanced due to the fact that the auditor(s) or auditing team are independent to the organization or road construction project being audited.

The differences between the traditional audit and a road safety audit lies in the nature of the audit process.  The traditional audit is performed on management’s prepared financial reports. These reports should be prepared in accordance to the generally accepted accounting principles (GAAP). The initial stages of an audit process involve the acceptance of a client followed by the auditor’s assessment and measurement of the degree of risk, that financial statements will me materially misstated.  The auditor does this by understanding the client’s business and industry, evaluating the client’s internal control and performing analytical procedures.  A plan of audit procedures is then prepared to gather the necessary evidence on which to base an opinion about the financial statements. Generating and gathering and interpreting audit evidence to support or contradict management’s assertions in the financial statements follows. Finally the auditor completes the audits by concluding whether or not each assertion made by management is true, hence expresses an opinion about the reliability of the financial statements.   The auditing process is carried out in accordance to the auditing standards (AUSs), which are ‘the basic principles, and essential procedures that govern the professional conduct of the auditor’.

To avoid the perception that safety audits reflect a lack of faith in the competence of a project's designers and engineers, the audits are made an integral part of the construction process. In doing this, ‘the total cost of a project [is] reduced by promoting timely alterations to construction plans and lowers costs associated with finished roadways by decreasing the number of crashes and reducing litigation’.

The process of a safety audit can be applied to any or all of the five stages involved in road construction. These stages include the ‘feasibility stage, draft design stage, detailed design stage, pre-opening stage, and in-service stage’.  At each stage the auditor will assess different aspects in the design and construction. In the feasibility stage, such things as:

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…the scope of a project, route choice, selection of design standard, impact on the existing road network, route continuity, provision of interchanges or intersections, access control, number of lanes, route terminals, stage development, and more, 

would be examined. In the draft design stage:

…horizontal and vertical alignment, sightlines, intersection layouts, land and shoulder width, pavement cross fall and superelevation, overtaking lanes, provision for parked and stationary vehicles, provision for cyclists and pedestrians, effects of departures from standards and guidelines, safety during construction, and so on, 

are audited. In the detailed design stage before the preparation of contract documents, the auditor ...

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The Auditing Process - Applied.
Document Details
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    3775
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  • Level
    University Degree
  • Subject
    Business and Administrative studies
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