Operational Audits: Going Beyond Internal Audits 

Posted by: Bobby O'Neal | February 14, 2019

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Internal audits are a very common occurrence in businesses. Operational audits, however, are rarer. These audits can deliver wider-ranging benefits compared to internal audits, but take more effort to carry out, which is a major reason why businesses do not do operational audits more often.

Operational Audit

What are operational audits?

Operational audits are audits that focus on the effectiveness, productivity, and cost efficiency of the operations of the business. Internal audits focus on what has happened already. Businesses look at the mistakes that were made and the vulnerabilities in the system which allowed those mistakes to be made. Operational audits are different – they don’t look at whether things were done correctly or incorrectly, they instead look at the possible improvements in the business processes. A process which produces no errors will be considered good in an internal audit. The same process will be considered good in an operational audit if there are no errors, the process is completed in optimal time, and all resources are used efficiently.

For effectiveness, productivity and cost efficiency be sure to read “Four Ways Internal Audit Software Can Help Your Business”

Advantages of the operational audit process

The objective of the operational audit process is to improve the way the business performs. An operational audit can help businesses lower costs. It also helps businesses decrease the turnaround time for many processes, directly improving service delivery and customer satisfaction.

1. Improving departmental effectiveness

Doing an operational audit allows management to compare and rank the effectiveness of different departments or teams within the organization. This is a fantastic way of finding the best practices for completing a process. Management simply has to see every team’s performance for each process and then select the teams which perform the process most effectively. Then the best performing team can be analyzed to find out how they are performing better than other teams. Once that is understood, all other teams can be trained to reach the effectiveness level of the team that performs best. Businesses can thus improve their performance team by team, resulting in the performance of the whole organization getting better.

Go in more detail with our recent blogpost “Increasing Audit Efficiency and Frequency Through Audit Management”

2. Discovering opportunities for improvement

Operational audit programs are much more in-depth than normal internal audits. They do not look at how things are, they also look at how things could be. This means that in an operational audit the auditors do not simply audit the performance of the organization, they also look for better ways of accomplishing the same tasks outside of the organization. I an organization takes 10 days to complete a process, their operational auditor will also look at the competition and see how many days it takes them to complete the same process. The operational auditor will also be interested in discovering bottlenecks in the process and see whether removing the bottlenecks is possible.

3. Increasing the efficiency of operational audits

If operational audits can provide such benefits, why aren’t they more common in businesses? The answer to this is very simple; operational audits take a lot of time and resources. Normal internal audits themselves take a lot of resources and operational audits are even more intense. Businesses want to improve efficiency and the last thing they want is to start a process that decreases efficiency. Operational audits require a lot of collaboration with employees – employees that have other important job roles to fulfill. If the auditor keeps calling people into meetings and taking follow-ups with people, it can have a negative effect on the very processes the auditor is trying to improve.

We have separately posted an in-depth article “Why Automated Audit Management System is Important?”

This problem goes away with proper audit management. Audit management systems are designed to allow auditors to easily and quickly carry out audits. They allow the business to collaborate on audits in a non-disruptive manner. Instead of calling a lot of meetings, all the required communication can be carried out in the audit management system. All updates and insights can also be easily shared by giving everyone access to the system. All of these and many other efficiency related features in audit management systems take away the inefficiency which keeps businesses away from carrying out operational audits.

If your business is looking for a more effective and efficient way to manage audits, then make sure you look at the Predict360 Audit Management system. Get in touch with our team for a demonstration of the solution’s features.

About the Company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.

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