Copyright 2009 John Wiley & Sons, Inc.

Chapter 12
Project Auditing
Project Audit
A formal review of any aspect of a
project.
Project audits are not limited to
financial matters
Project audits may not be performed by
accountants
Purpose of EvaluationGoals of the
System
The main purpose of an audit is to help
achieve the goals of the project
A project audit is equivalent to the
application of TQM to project
management
Approach to Project Audit
All facets of the project are studied
The strengths and weaknesses are
identified
Recommendations are prepared to help
this, and future, projects
Project Audit Recommendations
Identify problems earlier
Clarify performance
Improve performance
Locate technological advances
Evaluate quality
Reduce costs
Improve risk identification
Many more
Direct Versus Indirect
Direct goals
Indirect goals
Indirect Goals
Improve understanding by parent organization
Improve management by parent organization
Improve team effort on the project
Identify strengths and weaknesses
Better identify project risks
Identify ways to improve the skills of project
members
Frequency of audits
1. How many?
2. Timing?
Audit Timing
All significant projects should be
audited
Larger projects may be audited several
times
An audit may also be conducted after
the project is over (post-project audits)
The Project Audit
1. Current status of the project
2. Expected status of the project
3. Status of critical tasks
4. An assessment of potential risks
5. What lessons can be applied to other
projects
6. What are the limitations of the audit
Depth of the Audit
1. General Audit
2. Detailed Audit
3. Technical Audit
Constraints
Need
Time
Money
Construction and Use of the Audit
Report
1. It should facilitate the comparison of actual
versus predicted results
2. Significant deviations should be highlighted
3. Reasons for significant deviations should
be given
4. Plans for resolving negative deviations
should be discussed
Audit report
1. Introduction
2. Current status
3. Future project status
4. Critical management issues
5. Risk analysis
6. Limitations and assumptions
Responsibilities of the Project Auditor
Be honest and ethical
Be independent
Tell the whole truth
Seek help for technical issues
The Project Audit Life Cycle
1. Project audit initiation
2. Project baseline definition
3. Establishing an audit database
4. Preliminary analysis of the project
5. Audit report preparation
6. Project audit termination
Some Essentials of a Project Audit
Need to select an audit team with
experience and expertise
Auditors need access to top
management
Auditors need access to project
personnel and others
Auditors need access to all records
Measurement
Many aspects are easy to measure
Performance against budget and
schedule are usually straightforward
Measurement on projects that include a
profit component is more difficult