Review of performance objectives by audit function

Expectations from the internal audit function (IA) have seen an exponential rise in recent years. IA is nowadays expected to deliver ‘value-addition’ along with its historical mandate of checking compliance with business processes, applicable statutes and accounting norms.

One area where I think that IA can add a lot of value is in ensuring that the entire organization is working towards the same set of objectives. This can be achieved by annually carrying out a review, at the start of the business year, of all the agreed set of performance objectives for the key personnel within the organization.

Such a review may be carried out with an intention to provide an opinion on whether:-

1. The annual targets for the organization have been appropriately translated into performance objectives for the entire top management team (i.e. the C-suite); and

2. There exists an alignment between the performance objectives of the C-suite and their subordinates (up to three levels below, at the very least).

The foremost benefit of such a review will be that it will enable an organization to course-correct itself before committing any resources to activities or projects which do not relate to its annual targets at all. It will also help in preventing any potential destructive behaviour on account of individuals or functions or departments working at cross-purposes with one another.

I look forward to your thoughts on the feasibility of such an initiative as well as experiences if such a review has been performed in your organization any time in the past.