Question
Case Study #4 - Audit Engagement - Operational Safety Audit AFR Manufacturing Company's senior management asked the internal audit function to conduct an operational safety
Case Study #4 - Audit Engagement - Operational Safety Audit
AFR Manufacturing Company's senior management asked the internal
audit function to conduct an operational safety audit of the production
facility's metal drill press unit. More specifically, the internal audit
function was asked to determine how well the metal drill press
equipment and equipment operators comply with company safety
policies.
Five downtime injuries of drill press operators occurred in the last six
months. The total downtime for the five injuries was 37 hours.
Management estimated that the drill press downtime, and the resultant
decrease in overall productivity, reduced revenue by approximately
$265,000. In addition to the downtime injuries, two drill press operators
experienced detectible hearing loss during the six-month period.
The internal auditors learned that the company's safety policies include
the following:
Operators are required to wear safety glasses, ear plugs, and
protective gloves.
The drill presses are required to have a clear, plastic safety shield and
a protected channel to safely feed the metal through the press.
The drill is operated by a knee switch. The operator engages and
disengages the drill by shifting his or her right knee.
The internal auditors found the equipment to be in relatively poor
condition with little evidence of any regular maintenance. Drill bits were
not replaced as they became dull, and broken bits often were used
because new bits were not kept in supply. Two of the 10 drill press
machines were missing safety shields. Five of the 10 machine operators
were using the protective ear plugs at the time the auditors visited the
plant and six were wearing safety glasses. Four of the knee switches
were found to be sticking occasionally in both the off and on positions.
The auditors perceived a general sense of negligencenegligence by
production management, drill press equipment operators, and
maintenance employees.
A.Based on the scenario presented above:
1.Clearly state the internal audit engagement objective.
2. Prepare two well-written internal audit observations (issues) that
include: condition, criteria, consequence(s), and cause(s).
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