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Audit Tips


November 26, 2020
5 Ways Root Cause Analysis Can Improve Performance Audits

Root cause analysis is an approach to understanding why something happened or how a situation developed, whether it is an industrial accident, a defective product, or a program deficiency. It can also be used to drive efficiency, eliminate waste, or improve business processes.

Root cause analysis can be a great tool for public sector auditors because it provides them with opportunities to add more value to audit reports and increase their impact. Here are some of the potential benefits of using this tool:

Audit Tip 1

A root cause analysis mindset will contribute to a better audit

A root cause mindset is essentially a state of mind in which auditors are always thinking “Why did this happen?”. While it is very important to focus audit efforts and to make recommendations for improvements, equally important is to explore why something happened in the first place: “How did this situation develop?”. This type of thinking, or mindset, starts at the onset of the audit process and continues right through to the reporting phase.

Audit Tip 2

Root cause analysis can help focus audit efforts

Considering possible root causes for potential deficiencies before the audit plan is finalized can help ensure that the right issues are selected. This preliminary analysis is not meant to prejudge the final audit outcome but, rather, to determine what to look for in subsequent examination work. In other words, preliminary root cause analysis is an input to audit scoping.

Audit Tip 3

Root cause analysis provides insights and explanations for audit findings

Auditors often end up asking the question “why”? Why do the deficiencies occur? Why are departments and agencies not in compliance? Why are risks not being managed or intended results not being realized? Why are strategies not developed? Why is information needed to support decisions not available? Often these types of audit findings are symptoms or manifestations of much deeper, more systemic factors. Analyzing the underlying—or root—causes of observed deficiencies helps to delve below the surface, beyond the symptoms, to answer these “why?” questions.

Audit Tip 4

Root cause analysis helps auditors to formulate better recommendations

This may be the best argument in favor of undertaking root cause analysis. Using this tool allows audit offices to add more value to their work by developing audit recommendations that are aimed at correcting the underlying causes of reported findings or deficiencies. The ultimate goal is to ensure that lasting solutions can be designed and put in place by management so as to avoid repetition, report after report, of the same audit findings.

Audit Tip 5

Root cause analysis helps auditors to take organizational culture into account

The culture of any organization influences how it operates in reality. However, public sector auditors rarely set out to audit organizational culture and often do not consider how it could influence their audit observations and conclusions. But, because culture is often a factor underlying problems and deficiencies in audited organizations, using root cause analysis tools exposes auditors to cultural causes and incites them to consider this type of cause as they formulate their findings and recommendations. In this way, root cause analysis can help auditors to take organizational culture into account in all their audits. (For more information on this topic, see our Research Highlights article Auditing Organizational Culture in the Public Sector).

 

Liked it?

There is much more to learn in the CAAF Discussion Paper Better Integrating Root Cause Analysis into Public Sector Performance Auditing – Second Edition and in our Root Cause Analysis course. Also see our webinar Root Cause Analysis in Audits.

 


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