After recovering from a major global economic slowdown, the companies have adopted new strategies to achieve sustainable business growth. The main strategy adopted by the management includes the value creation through improved operational performance – including efficiency, speed, agility, dimensions of quality, cost reduction, customer value, wastage, etc. And hence, operational audit is undertaken at the instance of management for providing it with information and appraisal of operations and activities.
Operational audit is a future-oriented, systematic, and independent evaluation of organizational activities. It is a business appraisal approach to improve the efficiency of its operations and profitability. It evaluates the effectiveness, efficiency and economy of operations of an organization and provides recommendations to improve.
Operational audit not only evaluates the performance and operations, but also the objectives and plans formulated to carry out the operations.
Managers are interviewed for details concerning company systems and procedures. Employees are interviewed and observed in their work environments. Observation can lead to important insights into operational deficiencies that would not be evident through an interview.
As Operational Audit can bring a huge value addition to organization as it will pin point not only the cause for the inefficiency of the activities but also the remedies to improve them. Hence the cost involved in carrying out the Operational Audit could be negligible when compared to the long term benefits which operational audit will bring to the business. In addition to making the business more efficient and profitable in the long run, an operational audit will also provide the management with some new and different perspectives of looking at their activities and its spending habits. It makes executives aware of the problems that might not have been found otherwise and lets them evaluate risks of the future. Managers also can use results to motivate employees, as the company always has something to work toward at the end of the process.