Audit vs Evaluation
Audit and evaluation are two important terms with respect to any organization and refer to means of assessing products and performance. There are many similarities in these two processes but there are glaring differences that need to be taken into account as well. This article will highlight these differences to enable a person to appreciate them in a better manner.
While an audit is the evaluation of a person, organization or a product to determine its authenticity and validity or to verify adherence to a set of predefined process, evaluation is about understanding a process and then making suitable changes in the process to get an improved result. Though they are both types of assessments, audits are carried out to ensure there are no financial irregularities in a financial institution, evaluation can be carried out in any organization whether it is financial or associated with any other sphere of activity to judge the efficiency of the system. Of late however, audits are also carried out to assess security risks, environmental and other system’s performance.
Major objective behind an evaluation is to understand a process in a better manner and to learn by doing. It simply means you can make a system or a process better only when you understand it fully. It is done to learn new ways of doing a process by re-engineering or redesigning so as to get better efficiency. The most important factors in evaluation are to understand if we are doing right things, whether we are doing them in a right manner, and whether there are better ways of doing them. Evaluation is a good way to see if the results are being achieved, and if not, what the reasons behind failure are.
Audit on the other hand is a tool to ensure that operations and processes of an organization are being carried in adherence to a pre defined standard procedures and if there are any financial irregularities. Overall working efficiency and performance of the organization is checked through an audit. Audits are mainly of two types, quality and integrated audits. While quality audits asses the efficiency of the management in reaching the targets effectively addressing the problems, integrated audits take into account company’s internal controls along with financial reporting.
Audit can be internal or external. Internal audit is carried out by experts within the organization and reported to the top management. On the other hand, external audits are carried out by independent audit companies and the results are conveyed to the governing body of the organization being audited.
Difference between Audit and Evaluation
• Evaluation is an ongoing internal process and a part of the management cycle. On the other hand, audit comes after management cycle and is independent of it.
• Evaluation talks about doing things in a better way to improve the efficiency of the system while audit points out financial irregularities
• Audit can be performed at any time of the operational cycle while evaluation is usually done at the end of a phase.
• Both aim at improving the efficiency of an organization and must be carried out in tandem.