Operational audits are a systematic and objective evaluation of an organization's operations to assess how effectively it uses its resources to achieve its objectives. This in-depth, forward-looking process is used by auditors to evaluate the operational activities of a company and uncover any risks that may be present. To get a full album of new ideas to improve their businesses, companies turn to operational audits. The operational audit process involves five distinct stages.
The first stage is the planning stage, where the auditor identifies the scope of the audit and develops an audit plan. The second stage is the execution stage, where the auditor collects evidence and documents the results. The third stage is the evaluation stage, where the auditor evaluates the evidence collected and determines if there are any risks or areas for improvement. The fourth stage is the reporting stage, where the auditor prepares a report on their findings and recommendations.
Finally, the fifth stage is the follow-up stage, where the auditor monitors progress on any recommendations made. During each of these stages, auditors will use a variety of techniques to evaluate an organization's operations. These techniques include interviews with staff, observation of processes, review of documents and records, and analysis of data. Auditors will also use risk assessment tools to identify potential risks and areas for improvement. Unlike financial audits, which are carried out by external entities, operational audits are usually carried out by an internal auditor.
However, if an organization does not have an internal auditing department or if the internal audit team does not have sufficient experience and knowledge for certain key operations, they may consider contracting these services to external firms. Operational audits help provide consumers with higher-quality and more cost-effective products or services, often leading them to return to business. Understanding the true state of operations is the basis for a healthier, more competitive and more profitable organization. Operational audits are a forward-looking process and are part of many organizations' suite of continuous business improvement processes.
