Question 3

Yusof Manufacturing Company's senior management asked the Internal Audit Function (IAF) to conduct an operational safety audit of the production facility's metal drill press unit. More specifically, the IAF was asked to determine how well the metal drill press equipment and equipment operators comply with the company's 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 RM265,000. In addition to the downtime injuries, two drill press operators experienced detectible hearing loss during the six-month period.

The internal auditors discovered 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 become dull and broken bits were often 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 negligence - negligence by production management, drill press equipment operators and maintenance employees.

Required:

a)Explain clearly the internal audit engagement objective.

b)Discuss the existing condition found by the internal auditor when they conducted the operational audit.

c)Explain the safety policies put in place by the organization.

d)Analyze the causes of non-compliance.

e)Suggest recommendation to ensure workers comply with the organization's safety policies.

f)Describe the role the IAF plays in risk management, control and governance.

[RH1]If possible, limit the number of questions to 5.