[image] AI. Day .2 Audit Parameters Types of Audit. 

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[image] AI. Prof. AY. Scope What to Review Audit Plan AUDIT PARAMETERS Scope • Criteria • Objectives Criteria Standards to Meet Methods Objectives Goals to Achieve Timeframes Defining the Audit Parameters. 

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Scope
What to Review
Audit Plan
AUDIT
PARAMETERS
Scope • Criteria • Objectives
Criteria
Standards to Meet
Methods
Objectives
Goals to Achieve
Timeframes
Defining the Audit Parameters

[image] AI. Prof. AY. LACK OF CLEAR PARAMETERS Leads to Focus & Disputes Confusion & Conflict Unclear Guidelines Clear Parameters Defined Rules Disputes Alignment Set Rules, Reduce Conflict. 

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LACK OF
CLEAR PARAMETERS
Leads to Focus & Disputes
Confusion & Conflict
Unclear Guidelines
Clear Parameters
Defined Rules
Disputes
Alignment
Set Rules, Reduce Conflict

[image] AI. TYPES AUDITS 1st • 2nd • 3rd Party 2nd Party Audit ISt Party Audit By Customers & Stakeholders By Own Organization 3rd Party Audit External Audit By Independent Body Disputes Alignment Know the Differences. 

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TYPES AUDITS
1st • 2nd • 3rd Party
2nd Party Audit
ISt Party Audit
By Customers & Stakeholders
By Own Organization
3rd Party Audit
External Audit
By Independent Body
Disputes
Alignment
Know the Differences

[image] AI. FINANCIAL PERFORMANCE AND BUDGET ACHIEVEMENT. 

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FINANCIAL PERFORMANCE AND BUDGET ACHIEVEMENT

The company implemented several hedging measures. By locking 50% of the copper price, it saved 20 million yuan. Importing alternative materials for 15% of the plastic saved 8 million yuan, and through logistics bidding, the average sea - freight price decreased by 6%, saving 5 million yuan. These measures are expected to increase the gross margin by 0.8 percentage points in Q4.

The gross margin in Q3 was 24.3%, lower than the budget of 26.0% and last year's 25.5%. This decline was mainly due to several factors that affected the company's profitability.

Raw material price increases, such as a 12% increase in copper and an 8% increase in plastic, led to a 1.1 - percentage - point decrease in gross margin. Freight rate hikes

INDEPENDENT IMPARTIAL
1st • 2nd • 3rd Party
Independent
Free from Influence
Impartial
- Fair & Objective
No Control by Auditee
Neutral & Unbiased
Independence is Structural — VS.— Impartiality is Behavioral / \ I /
Know the Differences

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笔记本电脑的键盘上

AI 生成的内容可能不正确。

The actual sales expense ratio was 8.1%, lower than the budget of 8.5%, the management expense ratio was 4.2% (budget 4.5%), and the R & D expense ratio was 5.0%, meeting the budget. This shows the company's effective cost - control measures.

Channel rebates cost 120 million yuan, with an ROI of 2.8, generating an incremental gross profit of 336 million yuan. Online advertising cost 90 million yuan, with an ROI of 3.2, resulting in new revenue of 288 million yuan.

Tightening travel standards saved 4 million yuan, and the launch of the financial shared service center will save 12 million yuan in annual labor costs for 3 years, demonstrating the company's long - term cost - control strategies.

THE AUDIT
Who Commissions the Audit?
Top Management
Free from Influence
By Own Organization
Requests the Audit
Customer or Client
Fair & Objective
By Customers & Stakeholders
Independence is Structural — VS. — Impartiality is Behavioral
Meeting Their Needs

[image] AI. About our. PART 02. Market Dynamics and Competitive Landscape. 

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Market Dynamics and Competitive Landscape

Evaluate & Report
AUDITOR'S ROLE
Evaluate & Report, Not Solve
Not Solve Problems
Findings & Compliance
Requests the Audit
No Fixing or Solutions
Stay Impartial
VSO stay Independent/\ A
Remain Neutral
Assess, Don't Address

[image] AI. “Systematic, independent and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which the audit criteria are fulfilled”. 

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“Systematic, independent and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which the audit criteria are fulfilled”

[image] AI. MARKET DYNAMICS AND COMPETITIVE LANDSCAPE. 

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MARKET DYNAMICS AND COMPETITIVE LANDSCAPE

Company Strategy Alignment The company's high - end strategy is correct, as it aligns with the market trend of consumption stratification, which is conducive to the company's long - term development.

Market Segmentation The high - end market showed a 12% growth, with both volume and price increasing, while the low - end market declined by 6%, with both volume and price dropping. This shows a clear trend of consumption stratification in the market.

Overall Industry Growth The overall sales growth rate of the industry in Q3 was 4%, down from 9% in Q2, indicating a slowdown in industry growth.

AUDIT PROCESS
DEFINITION OF
Systematic
Organized Approach
Organized Approach
a Stay Impartial
Remain Neutral
Who Commissions the Audit?
Independent
Unbiased & Objective
AUDIT PROCESS
Gathering & Evaluating Audit Evidence
Documented
Recorded Evidence
No Fixing or Solutions
Stay Independent —
Avoid Influence
"Systematic, Independent & Documented."

[image] AI. Prof. AY. PART 02. Process Audit vs Procedure Audit. 

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The proportion of online revenue increased from 18% in Q2 to 27% in Q3, with live - streaming e - commerce accounting for 62% of online revenue, indicating the rapid development of the online sales channel.

The inventory of traditional dealers increased by 15% quarter - on - quarter, which may be affected by market demand changes and channel inventory management.

The return rate of DTC direct sales was 3.5%, lower than the industry average of 7%, showing the company's strong product quality and customer service in the direct - sales channel.

DIFFERENCE BETWEEN
PROCESS PROCEDURE
PROCESS
Dynamic Flow
Transfornis Inputs to Outputs
Focus on "What Happens?"
Interconnected Activities
PROCEDURE
" Step-by-Step Method
• Unbiased & Objective
Detailed Instructions
AUDIT PROCESS
Gathering & Evaluating Audit Evidence
Flow vs. Steps
Systematic, Independent & Documented.
Know the Distinction
Focus on "How to Do
Documented Instructions

[image] AI. OPERATIONAL EFFICIENCY AND SUPPLY CHAIN RESILIENCE. 

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OPERATIONAL EFFICIENCY AND SUPPLY CHAIN RESILIENCE

Overall Capacity Utilization The overall capacity utilization rate was 78%, an increase of 6 percentage points, indicating that the company's production capacity was better utilized. Bottleneck in SMT SMT SMTpatch became the bottleneck in production. However, through external cooperation and double - shift work, the daily production capacity increased from 40k to 48k, a 20% increase, ensuring the production progress. Delivery Commitment Fulfillment The fulfillment rate of peak - season delivery commitments reached 98.5%, demonstrating the company's strong production and delivery capabilities.

Series One Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 40 80 60 70 190 150 145 195 185 320 405 574 Series Two Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20 40 20 10 20 80 60 60 90 70 180 229

DIFFICULTY IN
PREPARING
PROCESS vs. PROCEDURE AUDIT
Process Audit
In-Depth & Complex
Procedure Audit
Simple & Checklist-Based
e Check Documented Steps
• Verify Compliance
• Analyze Interactions
• Follow Instructions
• Assess Risks & KPis
• Evaluate Performance VS.
More Challenging
• -Interconnected Activities
More Straightforward
- Focused Review
Broad Insight vs. Specific Compliance
"Systematic, Independent & Documented."

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Inventory Turnover Days The turnover days of raw materials decreased from the previous period to 35 days, a 3 - day reduction. In - process products' turnover days decreased by 2 days to 18 days, and finished products' turnover days decreased by 5 days to 72 days, showing an improvement in inventory management efficiency.

Obsolete Inventory Ratio The proportion of obsolete inventory decreased from 9% in Q2 to 5%, effectively releasing 110 million yuan in cash flow and reducing inventory costs.

Cash - Flow Release The optimization of the inventory structure released a large amount of cash flow, which is beneficial for the company's capital operation and business expansion.

CRADLE TO GRAVE vs. GRAVE TO CRADLE
Cradle to Grave
Start to Finish
INPUT
End-to-End Conformity
Full Process Overview
Grave to Cradle
Back to Origin
Root Cause Analysis
@ Tracing Back to Source
OUTPUT
Broad Analysis
Focused Review
r. More Straightforward
More Challenging
Two Approaches, Different Insights
Know When to Apply Each

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The quality cost as a proportion of revenue decreased to 1.8%, a 0.6 - percentage - point reduction, indicating that the company's quality management has achieved good results.

External Loss Reduction External losses decreased by 30%, and the defective rate of key processes was 180 ppm, meeting the target of less than 200 ppm, which reflects the improvement of product quality.

Process Quality Improvement The reduction in quality costs and external losses is mainly due to the improvement of process quality, which enhances the company's market competitiveness.

AUDIT CHECKLISTS:
USEFULNESS & PITFALLS
CHECKLIST ADVANTAGES
Start to Finish
Ensures Coverage
V Consistent & Efficient
Keeps Auditors Focused
Guided & Thorough
CHECKLIST PITFALLS
— Back to Origin
Mechanical Approach
Ignores Context
Limits Flexibility
Rote& Restrictive
Tool, Not a Crutch.
Missed Requirements X
Inconsistent Results I X
Reduced Credibility

[image] AI. About our. PART 04. Q4 Management Action Plan (with Timeline). 

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Q4 Management Action Plan (with Timeline)

AUDITOR & AUDITEE RESPONSIBILITIES
Working Together for Audit Success
AUDITOR'S ROLE
Plan the Audit
Conduct Objectively
Report Findings
Vs.
V Maintain Professionalism @
Objective & Professional
for Successful Audits
AUDITEE'S ROLE
Provide Access
$$Cooperate Openly
Clarify Processes
Respond to Findings
Open & Cooperative
GOOD AUDIT BEHAVIOR
Respectful Objective
Non-Confrontational Evidence-Based
Tool, Not a Crutch.

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