The Importance of Project Audit
An audit is a monitoring system that uses quantitative and qualitative assessments tools to measure performance outcomes. Risk management is built into the audit process in that it enables project managers to identify and evaluate concerns, problems and challenges that may have surfaced during the course of the project. When inefficiencies are identified, root cause analysis can be performed, and corrective or preventive recommendations can be included in audit reports for future reference.
The project management function is used to drive enterprise change. A company's goals and objectives might be pursued through a series of strategic projects designed to facilitate systemic changes. Audits of strategic projects assess whether they have succeeded in meeting specific and measurable goals and objectives. For example, an audit evaluation might reveal that a goal related to sales projections was not met and the deficiency was due to insufficient training of project team members in skills required to perform core project duties. This information might be used to drive change in employee development initiatives.
Audits are used to evaluate project schedules and timetables established for a project, as well as its tasks and activities. This generally includes a comparison of timetable and schedule estimates against actual performance. Milestone reports may reveal overestimations or underestimations on specific tasks and activities during the course of the project. External or internal factors might be identified as the cause of the delay. For example, supplier delays are one type of external factor that can impact project schedules.
Project audits might identify excesses or shortfalls in resource allocations associated with a project. For example, project audits may reveal whether project performance deficiencies were tied to insufficient resource allocations. It might also reveal overbudgeting in allocating resources in certain areas for a project -- assessments that are important when developing future project budgets.
Project management includes the use of third-party suppliers and vendors for certain products or services. While supplier performance is generally audited as an independent assessment, it can also be performed as part of a project management audit. The results might impact future contracting and procurement decisions.
A project audit might be required to satisfy regulatory requirements. For example, the Sarbanes-Oxley Act of 2002, or SOX, was the U.S. federal regulator's response to a number of major accounting scandals. It aims, in part, to increase the public trust relating to general reporting and accounting practices. Generally, SOX applies to U.S. publicly traded companies and public accounting firms, and touches on matters such as auditor independence and enhanced financial disclosure. Companies that must comply with such regulations might gain a significant amount of data through the auditing process. Consult with legal counsel to determine your company's governmental reporting requirements.