Beyond The Financial Audit

Almost every organization over a certain size, conducts a financial audit on an annual or quarterly basis. This involves a thorough examination of the books by both internal and external people to assure that everything adds up. In undertaking this process the organization is able to see their areas of strength as well as those that need more improvement and can measure quantifiable successes and failures.

Depending on the nature of the organization, success can look different for different organizations – Apple wants to exceed quarterly earnings expectations every time it releases a new device, while the Red Cross wants to make sure it is directing their money to the areas of the world most in need and limiting the amount of money being spent on overhead costs.

Fewer organizations take this internal examination beyond the financial audit. One group that is required to perform this more comprehensive audit is private colleges and universities. In the United States, most privately run educational institutions succumb to a regular accreditation process, usually once every 3-10 years depending on the accrediting organization. While generally not required by law, having this accreditation is important for parents and students who want independent verification that they are spending their money on a school that meets quality standards.

During this accreditation process, internal people within the school, as well as representatives from accrediting organizations, look at the whole school in much the same way the financial auditors look at the books. They ask questions like “what is the mission of the school?” and “do the programs we offer and the students we admit further that mission?” They aim to measure in as quantifiable a manner as possible whether they are making tangible progress on the organization’s goals.

Undergoing an accreditation process can be hugely rewarding and helpful for any organization. It offers an opportunity for group-wide reflection forcing people to define the mission and goals of the organization as well as allowing employees and managers to look critically at whether the work they do every day is in service of that goal. It can strengthen the resilience of an organization when encountering challenging times.

Beyond the advantage of reflection, when done well, this process can transform the working relationships of people within an organization. Unlike a review process that exists simply between an employee and her manager, or even a department-wide brainstorming session, the reflection on a whole organization by a whole organization can force people to take a big-picture view of their place in the company and their company’s place in the world.

One way this is encouraged in the school accreditation process is that schools are expected to form multiple sub-committees to look at various aspects of school operations. These committees are made up of people who have expertise in the relevant areas but are often lead by people whose expertise lies in a different area of the school. By having, for example, the Director of Alumni Relations sitting on the committee focused on the admissions process, the committee receives the benefit of an outside view on what happens in admissions and the Director of Alumni Relations gains a much greater appreciation and knowledge of the work done by another department that she would rarely interact with otherwise.

Does your organization have an accreditation or similar non-financial audit process? If so, do you find it valuable?

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