Corporations utilize balanced scorecards and key performance indicators (KPIs) as a vehicle to manage performance and strategy. Studies show that companies have successfully implemented scorecards to improve customer satisfaction, increase sales and execute their strategic vision.
I found that KPIs integrated with implementation of business intelligence and process improvement (six sigma and others) increase the efficiency of the companywide audit process.
A recent benchmarking report identifies five groups of performance measures that are most frequently employed in balanced scorecards across industries from five major dimensions (perspectives): Customer, Shareholders (Financial/PLs), Business Process, Employee, and Learning and Innovation. I would add the Compliance and Regulatory Perspective
Today, I will give some examples of KPIs that can be applied for audit purposes:
COST METRICS – Finance Perspective
· Total audit department cost as a percentage of revenue
· Total audit department cost per audit salaries
· Internal audit cost components (salaries, services, consulting, travel expenses)
STAFFING METRICS – Employee/Learning Perspective
· Audit staff as a percentage of total employees
· Staff backgrounds by grade/profile,/specialization matrix (IT, Ops, Fi)
· Measuring performance: results from 360 degree appraisal reviews (or better 720 degree)
· Staff joining/leaving the department —last 2 years
· Staff turnover by grade
· Impact of using external resources
· Staff from Operations joined to participate in individual audits
· Allocation of training budgets
· Days of training per staff member
STRATEGY AND STRUCTURE METRICS
· Mission, strategy, and objectives
· Age of the department
· Department organization
AUDIT PLANNING AND TOOLS METRICS – Business Process Perspective
· Relevance of key activities
· Stakeholders and manager risk awareness
· Duration of periods of forward plans for audits
· Tools used by the audit department
INTERNAL AUDIT REPORTING METRICS – Customer Perspective
· Frequency in reporting to the audit committee
· Value and nature of audit recommendations
· Audit survey results
· Frequency and method of checking/reporting implementation
· Member of benchmarking discussion group
· Perception of the audit department (It can be done using the CSA forms)
· Value-added measurement tactics