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KPMG Peat Marwick LLP has unveiled a new and redesigned audit process called
"Business Measurement Process" (BMP).
This new approach reflects one firm's way of integrating what has usually
been thought of as nonaudit skills into the audit process within an industry
specialization framework.
According to KPMG, the new process helps provide insight into market changes
and best practices. The idea is to deliver more value by identifying
performance improvement opportunities for clients.
The BMP involves a five stage process -
Strategic Analysis. During the initial stage, the KPMG team works with the
client to identify and understand critical elements of the business and the
environment - including competition, technology, economic conditions,
legislation, industry issues, the client's objectives and strategies, and
the key risks that threaten achievement of the objectives.
Business Process Analysis. In this stage, the team studies the client's
business processes that most closely relate to achieving the business
objectives. Information gathered during this stage is used in preparing the
business model profile.
Risk Assessment. The KPMG team, in conjunction with management, identifies
processes in place to address and control the risks and considers how they
are being addressed and controlled. Information gathered during this stage
is used in preparing the business risk profile.
Business Measurement. Driven by the risk assessment of the previous stage,
the audit is completed during the business measurement stage. The team
focuses on processes and variables that have the greatest impact on
financial results. Comparisons of these measurements, along with financial
results, benchmark data, or other appropriate measures are obtained to
develop a "gap analysis."
Continuous Improvement. The gap analysis allows the team to identify a
client's performance improvement opportunities. In this stage, the team
focuses on both the financial and nonfinancial measures most likely to
generate the improvement the client seeks.
In addition to an opinion on a company's financial statements, the BMP
generates the following analyses:
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