An operational audit report which deals with the scrap disposal function in a manufacturing company is most likely to address:
A) The efficiency and effectiveness of the scrap disposal function and include any findings requiring corrective action.
B) Whether the scrap material inventory is reported as a current asset.
C) Whether the physical inventory count of the scrap material agrees with the recorded amount.
D) Whether the scrap materials inventory is valued at the lower of cost or market.

Question

Quizplus · Accepted Answer

An operational audit report focusing on the scrap disposal function would most likely evaluate the efficiency and effectiveness of the process, identifying any areas for improvement or corrective action. While other aspects, such as inventory reporting and valuation, may be tangentially related, they are not the primary focus of the audit.

An Operational Audit Report Which Deals with the Scrap Disposal