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Internal Audit

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Internal Audit
Chapter 5
Review
1. A business process is the set of connected activities linked with each other for the purpose of achieving an objective or goal.
2. Two general types of business processes are present in most organizations that deliver goods and services: the operating processes and the management and support processes. The operating processes include strategic planning, product and service design and development, marketing, production/delivery, invoicing, and collection. The management and support processes include obtaining and managing the organization’s human resources (this could include hiring, training, benefits), managing financial resources (including budgeting, financial accounting, treasury), managing the information technology resources, managing physical resources (facilities management, security, maintenance, etc.), the organization’s compliance and governance systems, and the process for managing the organization’s external stakeholders (government relations, public relations, etc.).
5. A top-down approach begins at the entity level with the organization’s objectives, and then identifies the key processes critical to the success of each of the organization’s objectives. A bottom-up approach begins by looking at all processes directly at the activity level, and then aggregates the identified processes across the organization.
7. The two common methods used to document processes are process maps and process write-ups.
Process maps show the inputs, workflows, process interactions, and outputs in a graphic form. A process write-up is a narrative description of how the process works.
10. The four strategies an organization can take to respond to risk are:
a. Controlling the risk (mitigating the risk) by reducing the likelihood of the event taking place, by reducing its impact, or both. For example, the airbags in a

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