What is an Audit Result Strategy?
Nov. 26, 2021 | 8 months, 3 weeks ago
Internal audits serve various purposes. Some audits assess compliance with laws and regulations. Others measure compliance with the organization's internal policies and procedures. A strategic audit helps small-business owners assess whether internal processes move the needle toward their strategic goals. Based on audit results, management adjusts operations to maximize progress toward the goals.
A business needs a strategic plan that includes short-term and long-term goals. Long-term goals for a bicycle shop may be to dominate the market for a niche product category -- high-end off-road bicycles, for example. Short-term objectives that support the goal may be to offer customization services and to increase the number of different models the store carries in the product category. Establishing the strategic plan gives auditors a baseline for their work.
Implementing the Plan
With the strategic plan in place, auditors examine business functions and assess each function to see if the work it does furthers the plan. At the bike shop, the physical layout should feature a special area for high-end mountain bikes. Management should provide training on new products to the sales force, and advertisers should advertise on mountain biking websites and promote the shop at local bike races.
The Audit Report
The strategic audit compares the state of a business as it exists on the day of the audit to the state of the business the way it would have looked and operated had it achieved its goals. The auditor prepares a written report that evaluates each functional unit of the business and grades it according to its alignment with the goals. For example, if a bike shop that wants to increase its mountain biking business spends its entire advertising budget promoting children's bikes, it might receive a D or an F in the audit. If the shop's sales team formed a bike racing team that plans to ride bicycles the store carries in an upcoming race in the community, it might receive an A or a B in the audit.
The Audit Cycle
The strategic audit is an ongoing process. A business owner implements changes based on the audit report, and the auditor team checks in periodically to reevaluate the performance of each unit. As the business achieves its goals, management updates the strategic plan, and the audit cycle begins anew.
by Mauricio Paz