Overcoming Barriers to Auditing Organizational Strategy
Internal audit teams often shy away from auditing organizational strategy due to perceived difficulties, including intuition-driven leadership, delicate board dynamics, and rapidly evolving strategic risks. However, this article argues that auditing strategy is one of the most valuable contributions internal audit can make, helping organizations ensure their long-term plans are realistic and well-governed. The author suggests a 'one bite at a time' approach, breaking down strategy audits into manageable components over time.
The Challenge of Auditing Strategy
Auditing organizational strategy presents unique challenges for internal audit professionals. Many leaders, particularly in smaller or rapidly growing organizations, may rely on intuition and experience rather than a strictly data-driven process for strategic planning, making it difficult for auditors to apply traditional structured tools. Furthermore, the sensitive nature of board-level discussions and the potential for groupthink can make questioning strategic decisions a delicate task. The dynamic and fast-changing landscape of strategic risks, encompassing everything from cybersecurity to geopolitical shifts, also leads many audit teams to feel ill-equipped to assess these complex areas, often defaulting to more familiar operational, financial, and compliance audits.
Why Strategy Audits are Crucial
Despite these hurdles, the article emphasizes that auditing strategy is a high-value activity for internal audit. It ensures that an organization's overarching plans are grounded in reality, not just wishful thinking, thereby strengthening governance and improving cross-functional alignment. This strategic involvement helps internal audit earn its place as a true strategic partner within the organization. PwC's 2023 Global Internal Audit Study highlights this disconnect, noting that while 68% of leaders desire internal audit's input on strategy, only 34% of audit effort is actually directed toward it.
A Practical Approach to Strategic Auditing
To make strategy audits more manageable, the author advocates for a phased, incremental approach rather than a single, overwhelming project. Internal audit can leverage its risk assessment process to break down strategy into digestible components, such as:
- Risk appetite alignment
- Stakeholder engagement effectiveness
- Organizational alignment with strategic goals
- Scenario planning robustness
- Clarity and relevance of success metrics
By spreading these smaller, focused audits across multiple projects over an extended period, internal audit can effectively integrate strategic oversight into its existing work plan, even with limited resources. This method allows for continuous improvement and adaptation, ultimately helping organizations build resilience and competitiveness in a constantly evolving business environment.
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