Conducting Internal and External Audits10/11/2018
Internal and external audits provide analytical insights about an organisation's finances, operations and governance.
Internal audits present an overview of an organisation’s current state of affairs, whilst external audits verify internal reports about an organisation’s financial health to its stakeholders and the government. Internal Audit
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Internal Audit | External Audit |
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Internal audits are analytical reports that are conducted by employees of an organisation. Although these reports are optional, they may shed valuable insights on an organisation’s operations and governance. | External audits are conducted by third-party individuals or accounting firms. These documents are compulsory reports that must be conducted to verify the organisation’s financial activities. |
These reports are directly conveyed to an organisation’s board of directors. | These reports are primarily created for the organisation’s stakeholders to review. |
Internal audits outline an organisation’s regular activities, and provide suggestions to improve its operations. | External audits are legislative reports that analyse and verify an organisation’s financial statements. |
Internal reports should be conducted on a continuous basis. This would provide management on relevant information about an organisation’s corporate affairs, which may be used to direct the organisation’s strategic goals. | Organisations are legally responsible for conducting external audits once a year. |
Components of a Strategy Map
Organisations may choose to refer to a historical, yet relevant, guidebook for their research practices.
“The Art of War” highlights five critical elements which ensure that a company’s strategic planning strategy is practical and helpful to its business affairs:
Mission
An organisation’s mission should determine its overarching purpose. It should define the problem that it intends to solve, the solution that it presents to address the problem, and its target audience.
Once an organisation has specified its mission, its managers may ensure that their respective departments’ activities are aligned with its key objectives.
As such, an organisation’s mission unites those who may significantly influence their corporate activities, such as its employees and stakeholders.
Ground
Organisations should prominent competitors in their industry. This would enable them to identify gaps that have not been addressed by existing products and solutions.
An organisation should also determine specific trends that may aid its expansion. They may also determine potential collaborators that may allow them to merge their customer bases or increase their earnings.
An organisation should also identify the specific rules that govern its marketplace. For instance, an organisation should determine effective strategies that their competitors and collaborators would adopt, such as emerging business models or increased investments in certain assets.
Climate
Climate considers changes in trends and timing. A corporation’s climate may either impede or bolster its market share.
A thorough understanding of their marketplace would allow an organisation to identify emerging trends that they may aid their expansion, or threats that may compromise its competitive position.
Using Perceived Value to Analyse Products and Services
An organisation should also acknowledge its customers’ preferences and perceptions. It should monitor the perceived value of its business solutions, which is measured according to how much a customer values a product and/or service.
The perceived value of an organisation’s products and services will influence its pricing strategies, budget for marketing campaigns, and other activities that would involve direct communication with their customers.
Command
Command is defined as the wisdom and skill of a corporation’s leaders.
An organisation’s managers should exercise appropriate leadership techniques to delegate tasks and responsibilities, and to lead their employees towards achieving their organisation’s primary goals.
Managers may use soft skills (e.g. teamwork and cooperation) and hard skills (e.g. tabulation and scheduling) to motivate their team to meet specific Key Performance Indicators (KPI).
Method
An organisation’s Method includes the skills and techniques that a team requires to fulfil the company’s strategy.
An organisation may establish guidelines for their financial, legal and operational disciplines. These guidelines may include:
“The Art of War” highlights five critical elements which ensure that a company’s strategic planning strategy is practical and helpful to its business affairs:
Mission
An organisation’s mission should determine its overarching purpose. It should define the problem that it intends to solve, the solution that it presents to address the problem, and its target audience.
Once an organisation has specified its mission, its managers may ensure that their respective departments’ activities are aligned with its key objectives.
As such, an organisation’s mission unites those who may significantly influence their corporate activities, such as its employees and stakeholders.
Ground
Organisations should prominent competitors in their industry. This would enable them to identify gaps that have not been addressed by existing products and solutions.
An organisation should also determine specific trends that may aid its expansion. They may also determine potential collaborators that may allow them to merge their customer bases or increase their earnings.
An organisation should also identify the specific rules that govern its marketplace. For instance, an organisation should determine effective strategies that their competitors and collaborators would adopt, such as emerging business models or increased investments in certain assets.
Climate
Climate considers changes in trends and timing. A corporation’s climate may either impede or bolster its market share.
A thorough understanding of their marketplace would allow an organisation to identify emerging trends that they may aid their expansion, or threats that may compromise its competitive position.
Using Perceived Value to Analyse Products and Services
An organisation should also acknowledge its customers’ preferences and perceptions. It should monitor the perceived value of its business solutions, which is measured according to how much a customer values a product and/or service.
The perceived value of an organisation’s products and services will influence its pricing strategies, budget for marketing campaigns, and other activities that would involve direct communication with their customers.
Command
Command is defined as the wisdom and skill of a corporation’s leaders.
An organisation’s managers should exercise appropriate leadership techniques to delegate tasks and responsibilities, and to lead their employees towards achieving their organisation’s primary goals.
Managers may use soft skills (e.g. teamwork and cooperation) and hard skills (e.g. tabulation and scheduling) to motivate their team to meet specific Key Performance Indicators (KPI).
Method
An organisation’s Method includes the skills and techniques that a team requires to fulfil the company’s strategy.
An organisation may establish guidelines for their financial, legal and operational disciplines. These guidelines may include:
- Penalties for deviation or misbehaviour
- Shared values that employees should practice
- Factors for rewards and promotions
- Miscellaneous logistics and metrics to facilitate an organisation’s key activities
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