The Importance of Auditing Your Company’s Strategic Plan

Abstract

A company’s strategic plan is its long-term outlook that sets out the plans, goals, objectives and actions for the next three to ten years. The board needs an objective assurance that the plan was properly developed. The internal audit function is best positioned to provide this assurance. The reason: it is one of the board’s most powerful mechanisms for understanding the full spectrum of key governance, risk, and control issues facing the company embodied in the strategic plan.Auditing a strategic plan begins with a review of what it constitutes (its elements) and the methodology (its process) used in developing the plan. It thus becomes much easier to focus the audit effort in determining whether the output for each step along the way in these two broad streams has been achieved.If not carefully planned and executed, a strategic plan audit could do irreparable damage to the reputation of the audit effort throughout the organization. As a result, it requires a multi-talented team with a high-powered leader, preferably the chief audit executive.Although a strategic plan fails due to such common factors as planning teams lacking an understanding of the business, lack of commitment, not having the right people, or not adapting to a changing environment to take full advantage of technological developments, there is a key reason often overlooked: lack of an audit of the plan itself which, if done properly, could uncover these reasons for failure long before they happen.