Operational Audit Checklist

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Operational audits are quite different from typical financial audits or regulatory examinations. The goal is to identify the strengths and weaknesses of company operations.They can be performed as internal audits, using current audit staff, or external audits, using outside professionals. Checklists tend to be extensive and highly detailed. This article outlines the major areas usually addressed in operational audits. Checklist details relate to specific companies, industries, markets, and internal departments.

Production Areas

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Of critical importance to manufacturing and product-creation companies, the production function details form a major section of the audit. Checklist items often include relationships with suppliers and staff, inventory management and control, alternate sources of raw materials, and all items involved in product creation, ongoing maintenance procedures, production-employee training programs, processing procedure documentation, use of best available technology, and environmental protection policies.

Sales Issues

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Sales departments require examination of all facets of this critical function. Operational audit checklists typically include analyzing the company’s competition and customers, product pricing, sales channels, sales philosophies, and sales personnel. If the company conducts electronic (or telephone) sales along with or in lieu of the brick-and-mortar variety, their back-office or call-center operations will appear on operational audit checklists.

Marketing and Promotion

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Marketing and promotion activities occupy important positions on operational audit checklists. Quality and effectiveness of websites is usually examined in detail. It is sometimes challenging for internal or external auditors to comment on how attractive the site is, but quality, ease of navigation, and timeliness of content can be evaluated. Other promotional activities, like community involvement, charitable efforts, and other for-profit or non-profit partnerships that promote the organization are viable checklist items.

Advertising and Branding Efforts

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Advertising affects the company’s gross income. Depending on the industry and competition, it also affects operating expenses and, therefore, net income. Analyzing the success of branding strategies is a more daunting exercise as they overlap the advertising, marketing, and promotion functions. Checklist items typically include effectiveness in reaching current and potential customers, sending clear messages, organization of the advertising “calendar”, and the quality of customer feedback.

Customer Service

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Customer service checklist items include quantity and quality of customer service personnel responses, feedback to determine customer satisfaction levels, timely customer question/problem follow-up, and level of company understanding of its customer base. Identifying areas needing improvement may generate further detailed checklist items to evaluate specific operational enhancements that could increase customer satisfaction.