With organizations perpetually looking for ways to cut costs, it’s crucial for internal audit to prove its value as a contributor to business goals. Performance metrics can be used to communicate the effectiveness of internal audit activities and alignment with organizational objectives to the audit committee and senior management.
Do you want to start tracking key performance indicators (KPIs) in your audits, but aren’t sure where to start? Read up on best practices for tracking metrics and download our free checklist of Top Metrics to Track in Your Audits below!
What Does KPI Stand For?
Key performance indicators (KPIs) are quantifiable measurements that demonstrate the effectiveness of an individual, department, or organization in achieving key goals. Clearly defining goals and tracking meaningful KPIs can provide valuable evidence to show that internal audit‘s activities are supporting the business’s strategic objectives.
What are KPIs in Audit?
Within internal audit, there are two main types of KPIs: execution and value. Most of the KPIs tracked by internal audit measure execution and completion rates.
Common key performance indicators include:
- Percentage of the audit plan completed.
- Count of issues found and recommendations made.
- Percentage of recommendations implemented on time.
- Hours spent per audit.
- Certifications held by audit team members.
On the other hand, value-based KPIs measure the effectiveness of the audit on the business.
Common key performance indicators include:
- Customer satisfaction.
- Increased productivity and efficiency.
- Decreased expenses.
- Leaner operations.
Ultimately, the KPIs you choose to implement must be the ones that work for your organization.
Track Metrics in Your Audit
Incorporating metrics into your audit projects can help you stay organized, meet your project goals, and demonstrate how internal audit‘s activities are aligned with company objectives.
Keep in Mind When Tracking Metrics in an Audit
- Use weekly check-ins with management to communicate identified issues, fieldwork status, and milestones.
- Set a timely target to issue your final report, e.g. within 30 days of completing the fieldwork.
Track Metrics in Your Audit Plan
Incorporating metrics into your overall audit plan can guide executive leadership in assessing internal audit‘s performance and goals, and ensure that your individual audit project metrics tie into these overall metrics as well.
Keep in Mind When Tracking Metrics in an Audit Plan
- For customer satisfaction results, identify the percentage of surveys returned and if scores are improving year over year.
- Identify your percentage of risks audited based on your risk assessment.
Tracking meaningful KPIs will put an internal audit department in a strong position to clearly measure and effectively communicate how their activities are supporting company strategy to the audit committee and senior management—showcasing internal audit as a partner adding value to the business.
Want to learn more about which metrics you should track as you plan, perform, and report on your audit projects? Download our free checklist of Top Metrics to Track in Your Audits below!
