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Check and Balance: 5 questions you need to answer to develop an Effective Audit Tool

Posted on 4/12/11 9:30 AM

There is no doubt that a vital component within your loss prevention initiatives is a store-based audit program. A well developed audit provides keen insight into what is happening in your store locations, how policies and procedures are followed, and most importantly, how well your associates are protecting your profitability.

Developing an effective audit tool begins with asking and answering some basic questions. Although basic, these questions should be asked regularly, even with an existing and mature program, to make sure your program remains on track and provides you with the most effective program possible.

What are the 5 questions you ask to develop an effective audit tool?

1.  What are the goals of your audit program?

This is the foundation of building an achievable audit program and without a clear sense of direction any program created will be destined for failure.  Goals should be written, defined and agreed upon by all parties before moving forward in the process.

2.  What questions or areas should be examined as part of the audit process?

It is extremely easy to be “all eyes and ears” for your company while visiting or auditing a location, but it is not necessary a good thing when attempting to evaluate risk or exposure with limited time and resources. These questions or areas should be directly related to the focus or goals used to define what the audit program is intended to achieve.

Does each question or area to be reviewed within the audit program contribute to achieving the goal? If not, the answer is clear that the question or area should be excluded and possibly be added to an existing or to be created District Manager Audit or Mystery Shopping Program.

For more information about developing good audit questions, read our best practice; “Operational v. Shrink Audits: Which one is best for you”

3.  Should the audit program’s questions be simply answered “yes” or “no” or scored?

Check and Balances resized 600Using a “yes” and “no” format to answer questions within an audit program can be easy and straightforward, but what does it mean when evaluating the location or comparing multiple locations in terms of risk or exposure?

A score, if determined by risk level, can more effectively measure compliance to defined questions or areas and can be used to generate an accurate means of comparison and benchmarking. This is also essential in attempting to help educate the audience on understanding any non-compliance as it relates to the predetermined risk level.

4.  Will the audit program be created by an individual, department or committee?

To define and evaluate what areas are pertinent for the program, a committee of representatives from key departments is usually the best option. Utilizing these members in the creation process can achieve the necessary “buy-in” required to launch a successful program and make certain all potential areas of risk or exposure have been considered from their point of view. 

An individual or department can certainly create the program without a committee, but additional points of view always shed light on areas that may have been initially overlooked.

5.  What will be done with the information collected?

Who is the target audience? What do you want the target audience to know and learn about the results? Giving some thought to who the target audience will be and the types of reporting that can be generated based on the information gathered may influence how the audit program is created, reported and distributed. 

These are simple straightforward questions, but without thorough planning problems will eventually emerge that may negatively impact the effectiveness and credibility of the program.

Poor initial planning or not checking on your program as it matures, can lead to;

  • Your team auditing items not related to your goals

  • Outdated or new areas of risk not addressed

  • Changes to policy and procedures that are not updated or addressed

Take the time in the early planning stages to ask and answer these questions and check back often in the process to make certain the focus of the program will still achieve the set goals.

  Written by Donald Sutherland, Audit Manager

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Topics: Loss Prevention program and development, Audits and Investigations

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