Every company needs to have annual, monthly and daily objectives in order to prosper in its activities. To do so, a knowledge of the internal elements of its structure, its functioning and its operations are required. It therefore needs an expertise. This is where internal auditing comes in. It helps a company to achieve its goals through the quality of its management, by systematically and methodically analyzing the progress of its risk management as well as its compliance with normative, contractual and regulatory requirements, and then by making proposals with the aim of consolidating its performance and returns.

In detail, what is it? Why is it important for a company to use it? And why is it a good idea to have us audit your company?

internal audit

The responsibilities of an internal auditor

An internal audit is performed by a specific agent: the internal auditor. By mission order, the auditor is solicited by the general management in order to evaluate the effectiveness of the practices of the various departments of the targeted company.

In order to be effective, the auditor must ideally :

  • be a good listener
  • be a team player
  • be rational and impartial
  • be able to manage stress well
  • adapt to all situations
  • have a critical mind.

He/she is expected to be pragmatic, have a global vision and a risk-oriented professional approach.

Between internal audit, ISO standards and strategic analysis

The notion of internal audit is vast because an audit can target many elements in a company.

In order to carry out your internal audits with quality, performance and conformity to CSR, Extrend Consulting respects the follow-up of several ISO standards, as well as the necessary strategies. This includes ISO 9001, ISO 14001, and 45001, however, the best practice of an internal audit and all of its sub-categories is mainly based on one particular standard: ISO 19011 which serves as an international reference.

The ISO 19011 standard and the quality management system audit

The management audit consists of an in-depth diagnosis of the management system of a company. It allows to evaluate its practical capacity.

However, it should be noted that the purpose of the audit is not to evaluate the individual abilities of managers, but rather to see if their management is effective in terms of productivity, relationships (customer relations, partner relations, manager-employee relations) and, of course, in terms of compliance with reputation standards. The individual achievements of the managers are not concerned by the management audit, but rather the global management of a company.

With this in mind, the international standard ISO 19011, as part of a comprehensive series of specific ISO management standards, was established to provide guidelines for a fact-based and ethical audit. In order to introduce but above all to support the good management of your company, we rely on this standard and apply for you an internal audit respecting all the fundamental principles of quality. In this sense, the internal audit process adopts an approach oriented towards the 7 principles of quality management, which are

  • Promoting leadership

A manager should not only be a boss, but above all a leader. He must be a good example for his employees and even his associates by knowing how to actively involve them in the achievement of common and individual objectives. This principle is based on the ability to inspire staff to be effective in the policies, strategies, management and development processes of the company's activities.

Results: Optimized efficiency and effectiveness of each individual in achieving common business goals, enhanced sense of coordination and team spirit, improved communication between each level and department

  • Customer orientation

For the management of a company to be well qualified, customer satisfaction is the key. It is necessary to constantly ensure that customers are satisfied, and occasionally surprise them. This principle is based on gaining and maintaining customer trust by interacting with them and understanding their needs.

Results: added value, customer loyalty, improved business operations, enhanced corporate image, expanded customer base, market share and increased sales.

  • Personal involvement

In order to develop and perpetuate the efficiency of a company's activities, all internal members must be competent, active and, above all, involved in the performance of their respective functions. This principle is closely linked to that of leadership and is based on respect and consideration for the work of each individual, helping each other to achieve better performance.

Results: improved collaboration between colleagues, development of trust within the staff, promotion of personal development, sharing of values rich in interests and knowledge.

  • A process approach

When a clear and functional process is followed and applied, the results are both satisfying and beneficial, and the margin for error is limited. This principle is based on the understanding and recognition of the importance of correlating and respecting all the processes of a company.

Results: Predictable and consistent gains, improved ability to focus on key development strategies, reduced risk of obstacles occurring through the implementation of a well-aligned management process.

  • Creating an improvement system or optimizing an existing system

For a company to thrive in its business, its performance level must not regress. This principle is based on a constant desire to improve, always keeping in mind that there is always room for improvement in a company.

Results: Creation of growth opportunities, ability to assimilate new knowledge and adapt new skills, learning focused on improvement efforts.

  • Stakeholder relationship management

In order to stay in the market as long as possible, a company has to manage its relationships with all interested parties such as suppliers, providers or the state, but also to pay attention to its neighborhood, which could either be beneficial or harmful to it. The principle is based on the management of a network of partners with the aim of progress (personal, commercial and professional).

Results: better control of the supply chain ensuring a stable flow of products and services, higher profits due to the effects of cooperation.

  • Evidence-based decision making

Before deciding on important decisions, thorough analyses and interpretations of the consequences of their application must first be made. This principle is based on avoiding risks that could have a negative impact on the company, as well as on taking the most beneficial development opportunities.

Results: excellent ability to review and question all decisions considered, improvement of decision-making means, rationality on the final conclusions (after the results of an audit).

Compliance auditing

Compliance auditing is a set of processes for processing evidence to determine whether it meets regulatory criteria.

Also known as a regularity audit, what sets it apart is that it provides reliable and transparent reports. Its objectives are essentially preventive in nature, as they consist of examining the effectiveness of the systems and resources implemented by the company. It identifies flaws in governance and compliance with internal audit codes, and then detects potential risks in terms of "performance".

Its purpose is therefore to verify compliance with the conditions of an audit on the body audited.

It promotes the implementation of necessary corrective measures and thus helps the managers in the responsibilities of their activities.

The performance audit

The performance audit aims to answer the following questions:

Are there already means in place to measure their effectiveness? If so, are they relevant? If not, how do you choose the right tools?

The process of this type of audit helps a company to develop and promote the performance of its activities by: improving the management of its operations and the proper functioning of an action process in a given market, all while giving the company a better visibility, image and reputation.

The CSR audit

Are societal programs and actions undertaken with objective consideration of performance, economics, and their impact on the environment? By adopting both compliance and performance principles, the CSR audit helps answer this question, as it is designed to ensure that your company's activities are compliant and respect all essential aspects of CSR (Corporate Social Responsibility).

The CSR audit is therefore a performance lever and an analysis tool that provides a vision of the social, environmental, ethical and economic implications of a company's activities.

The strategy audit

It focuses more on strategic development axes, particularly concerning the competitive market (opportunities to stand out), the efficiency of products and services, management processes, or technology. It evaluates the company's chances of success in its activities by considering its strategic elements.

For a better audit strategy, we use information ranking methodologies. Among the top 8 best analysis tools, there are :

The ADL matrix for an internal audit

In 1886, following the founding of the world's first international consulting firm, Arthur Dehon Little invented the ADL matrix, whose model is based on two criteria: the company's competitive position (favorable, unfavorable, marginal, strong, dominant) and the degree of maturity of its business (start-up, growth, mature, or declining)

The degree of maturity of the activity takes into account the 4 phases of the life cycle of a market, namely: start-up, growth, maturity and decline.

The Ansoff matrix

Do you want to choose a successful growth strategy to apply to your business? In 1957, Igor Ansoff designed a method to achieve this goal. It's called the Ansoff Matrix. Relatively simple, it is based on 4 strategic development options: market penetration, market development, product development, and finally diversification

This implies analyzing the degree of innovation of product and service offerings, as well as market knowledge (familiarization).

Porter's value chain

A value chain represents a sequence of company activities that are most likely to create value for the final consumers (transformation of inputs into outputs).

It aims to answer fundamental questions such as: What are the elements that add value to the company? How are they arranged? And how are they assets?

There are 2 types of activities that add value: core activities (production, internal logistics, basic or support services, marketing and sales) and support activities (technology development, human resources management, procurement, firm infrastructure).

The BCG Matrix

The BCG (Boston Consulting Group) matrix, the first portfolio matrix, was created by Bruce Henderson in 1960.

It is based on the principle that a company has SADs (Strategic Business Areas).

To identify the relative market share of the audited company, the matrix classifies them according to the following 4 categories

  • Cash cows (high in a slightly growing or shrinking market),
    • Stars (high in a high growth market),
    • Dilemmas (low in a growing market)
    • and Deadweight (low in a declining market).

In this way, the growth rate of the market is in view.

Porter's 5 strengths

This tool founded by Michael Porter aims to diagnose the major axes of a company in order to get hold of a competitive advantage that would make it stand out in the market. We talk about a major advantage because as Jason Cohen said "A real unfair advantage is something that cannot be copied or bought easily".

We analyze our competitive environment by taking into account these 5 dimensions:

  1. The bargaining power of customers,
  2. the threat of substitute products,
  3. the bargaining power of suppliers,
  4. the magnitude of competition,
  5. and the threat of new entrants.
  6. The Lean Canvas matrix

This strategy tool was developed by Ash Maurya. Inspired by the BMC (Business Model Canvas), its particularity is that its application is simpler and more adapted to start-ups. It is less complex because it simplifies the identification of the 9 key elements of the company by presenting them in the form of a table in an easy to read document.

The SWOT analysis

Created by Harvard University teachers including Andrews, Christensen, Guth and Learned, the essence of SWOT (Strength, Weakness, Opportunities, Threats) is to distinguish all strategic options for the development of a company based on its strengths, weaknesses, opportunities and threats (SWOT). Very suitable for very small companies or SMEs.

When using the SWOT during an internal audit, the focus is on strengths and weaknesses.

The Business Model Canvas or the 9-block matrix of Alexander Osterwalder

The Business Model Canvas (BMC) is the result of a collaboration between Yves Pigneur, a teacher at the University of Lausanne, and Alexander Osterwalder, a Swiss entrepreneur. The purpose of the BMC is to set up an adequate business model in order to improve the efficiency of a company's business. This matrix is based on 9 blocks: key activities, key resources, key partners, customers, customer relationships, value proposition, expenses, earnings, and distribution channels.

Advantages of using our expert firm for your internal audit

Whether it's a CSR, compliance, strategy, management or performance audit, Extrend Consulting can assist your company in conducting your internal audits. Based on the ISO 19011 of 2018 on quality management systems and other related ones such as ISO 9001, ISO 26000, 14001, and 45001, we bring you help:

  • analysis and quality monitoring of the steps of an internal control
  • compliance with QHSE and CSR standards
  • the use of all necessary strategic analysis tools
  • As our core business is based on quality, safety, environment, CSR and compliance with development projects, we also help you to certify your company ISO, for all standards available for certification.

Contact us, we will be happy to follow up!