Here comes the dreaded project audit. How can we get out of this? We have all experienced this at one point, or will. So, why do we fear the project audit? We fear what we don’t understand. Let’s get to know more about audits, and try to alleviate that fear.
Auditing has its roots in the accounting world, used to evaluate financial records, and ensure sound financial governance of the company. As a governance tool, auditing involves the review of documentation throughout the company’s financial systems. The purpose is to verify that all documentation follows company policies and procedures, as well as applicable laws. Any discrepancies provide insight into errors and flaws in the system (Groff et al., 2016).
Audits are a documented snapshot in time. They provide for an analysis of what has been done over the course of a specific period and are not forward-looking. They are historical in nature. Audits are in-depth investigations into large amounts of data (Juran & Godfrey, 1998). Therefore, audits are very time-consuming.
In project management, we see two different types of audits. Audits can be performed on the systems of the organization or on individual projects. The former is known as a project management audit. The latter is called a project audit.
The project management audit, similar to the accounting audit, is a review of documentation throughout the company’s projects. The purpose of a project management audit is a global review of the company’s policies and procedures to affirm they meet laws and industry best practices, to assure executive management that projects are properly managed, and ensure executive management is properly informed of the status of project work. The focus of these audits is on systems, processes, and the structure of the organization. The organizational focus would include, for example, training and authority levels.
The project audit is a review of project documentation at a single point of time in the project. The purpose of the project audit is to verify the project is being managed in compliance with the company’s policies and procedures, ensuring consistency. The focus of a project audit is on the processes and how they are being used by the project team.
Audits, whether at the project management level or the project level, provide great value to the organization. But more importantly to the project manager, there are great benefits as well. This is what should encourage your enthusiastic participation in your next audit.
The global benefits of performing project management audits and project audits come in the form of confidence and trust from executive management. Audits provide them with the verification that projects are being performed in accordance with laws and industry best practices, and that the information they are provided is valid and accurate. Knowing this can improve their support for project managers, and help them make better strategic decisions.
The more specific benefits the audits will provide are improved processes and systems, better training, and more delegated authority to the project manager. The audits will highlight weaknesses in processes and systems that may be visible to those in the project trenches. Visibility will also be provided to the weaknesses in training or ineffective authority levels.
There will be better support for needed improvements identified in the audit, so audits can be used to support change (SSC, 2015). Cooperation and even participation in audits can provide the voice for change. Audits are not to be feared if we understand their purpose and the benefits to be gained from them.
Audits can highlight irregularities that will lead to improved processes and systems, improve training, and improve project performance (Dusterwald et al., 2013). Audits can also create confidence in properly running systems which will increase trust from executives who struggle to understand and believe the project status information they receive in reports. Audits can become an important piece in the governance of your organization’s projects.
Dusterwald, R., Fries-Palm, S., Giesing, F., Pies, M., & Schwarz, U., (2013). Standard for auditing projects: definitions and rules. German institute for Internal Auditing. Retrieved from: www.diir.de/fileadmin/…/standards/…/Revisionsstandard_Nr_4_englisch_V2.1.pdf
Goff, M. Z., (2016). Contemporary role of internal auditing in corporate governance. Dynamic Relationships Management journal, 5(1), 51-63. doi: 10.17708/DRMJ.2016.v05n01a04
Shared Services Canada (SSC), (2015). Audit of project management governance: audit report. Office of Audit and Evaluation. Retrieved from: https://www.canada.ca/en/shared-services/corporate/publications/audit-project-management-governance-2015.html
Juran, M. J., & Godfrey, A. B., (1998). Juran’s quality handbook (5th Ed.). New York: McGraw-Hill.
Dr. Glen Jones, Ph.D., PMP, is the president of GMJ Leadership. He is an accomplished leader with over 26 years of experience in the development and management of large, complex international projects within the energy industry. Glen is currently a leadership coach and project management consultant performing project management audits, project audits, and 360 personnel assessments. His education culminated with his Ph.D. in project management from Northcentral University. Glen writes about strategy and governance.