Adding strategy to the audit plan

Organisations fail. Seldom is it due to control weakness or process inefficiency but because of strategic decisions.

This article takes a positive approach as to why and how internal audit should undertake audits in the strategic arena. In February 2018 in the days after Carillion went into administration, former Institute CEO, Dr Ian Peters, noted that ‘too often internal audit has been preoccupied with detailed low-level risk and has failed to focus on the bigger picture’.

Has the profession improved? What strategic assurance does your function provide?


Strategy is just another process

There are two clear elements to strategy; its creation and its execution. Internal audit should provide assurance across both, although often restricts itself solely to execution; the projects and processes that are familiar territory.

Strategic decisions, the creation of a strategy, set the direction for the organisation; its goals, objectives and business model. If something goes wrong at this level, it permeates through everything, just like culture and the widely acknowledged importance of the ‘tone from the top’.

Psychological research by Franck Schuurmans, Wharton Business School found that people mainly learn by discovery, heuristics, which limits decision making capabilities for complex problems…unless supported by a robust process. He suggests the problem can be resolved with improved framing, bias dissonance and decision feedback.

All strategy is based on a decision and that decision, regardless of whether it is made by an individual or a collective, can and should be subject to assurance for the protection of all stakeholders.

Audit leaders are adept at root cause analysis, getting to the nub of an issue. When auditing a major project, acquisition integration or transforming processes and the analysis leads back to an avoidable strategic decision made months or years earlier how much better would that assurance have been at the time?…