Strategic audits: Health check every strategy needs

When we fall ill, symptoms like fever or fatigue warn us that something is wrong. Organisations too face symptoms when their strategy is not working – declining performance, disengaged employees, or dissatisfied customers. But unlike the human body, strategy rarely sends obvious signals until it is too late. Traditionally, businesses rely on annual or mid-year reviews. The question is: are these enough?

In today’s volatile environment, the answer is a clear no. A far more powerful tool exists: the strategic audit. Just as medical check-ups prevent illnesses from becoming critical, strategic audits diagnose weaknesses, test assumptions, and keep strategies relevant.

What is strategy?

Before diving into strategic audits, we must first revisit strategy itself. Strategy has been defined in many ways:

• The long-term direction of an organisation.
• A course of actions designed to achieve specific objectives.
• Johnson, Scholes, and Whittington describe it as “the direction and scope of an organisation over the long term which achieves advantage through its configuration of resources within a changing environment to meet market needs and fulfil stakeholder expectations.”

At its core, strategy links vision, mission, values, and goals with actions that provide competitive advantage. The strategic plan is the blueprint, but a plan is only as strong as its execution-and its relevance in a changing environment.

What is a strategic audit?

Traditionally, auditors focused on compliance: checking whether policies, rules, and regulations were followed. But the modern business landscape has transformed this role. Internal auditors today can act as strategic auditors-interpreters of strategy rather than mere monitors of compliance.

A strategic audit asks:

• Is the vision still relevant?
• Are the mission and values aligned with long-term goals?
• Are assumptions realistic, and are strategies working in the current environment?
• Is execution happening as planned, and are KPIs being monitored?

It is not about criticising strategy but about clarifying the territory, testing assumptions, and identifying risks before they turn into crises.

What strategic auditors look at

Strategic audits can cover a broad spectrum:

• Strategic plan – Alignment of vision, mission, values, and goals.
• Mergers and acquisitions – Effectiveness of post-merger integration.
• Culture and ethics – Do values translate into day-to-day practice?
• Customer satisfaction – Are stakeholders’ expectations met?
• Reputation risk – Is the brand being safeguarded?
• Innovation and digital transformation – Are new technologies enabling growth?
• Corporate governance – Is oversight strong, transparent, and effective?

Moving beyond checklists: Insights from practice

Strategic auditing is not about noise or endless reporting. It is about seeing what others miss:

1. Strategy-to-risk mapping – Linking ambitions to hidden risks.

2. Assumption tracebacks – Testing beliefs and unspoken expectations.

3. Walkthroughs of readiness – Stress-testing plans before execution.

4. Document shadowing – Checking consistency across reports and commitments.

5. Tone mapping – Listening not just to words but to the mood and confidence of leadership.

These methods show that auditing strategy doesn’t mean directing the journey-it means ensuring the path is walkable, spotting fragilities, and asking the right questions before decisions are locked in.

The Board’s perspective

Boards today want more than compliance reports. They want clarity, synthesis, and insights that connect dots and provoke action. Strategic auditors are uniquely placed to provide this. But influence requires timeliness, clarity, and courage. Reporting after the fact is not enough-auditors must be present during planning, raising questions that others may hesitate to ask.

As one of the materials states: “Relevance fades without vigilance.” Audit functions that rest on past successes risk becoming irrelevant. Strategic auditors must therefore be proactive, visible, and focused on issues that matter most.

Challenges and capabilities required

Conducting a strategic audit is not easy. It requires experienced professionals who can interpret strategy, not just tick boxes. They must balance advisory and assurance roles-grounding strategy in discipline while sensing emerging risks. Importantly, they must have the credibility to persuade management to act on their findings.

In some cases, organisations may rely on external firms for independent audits, but ideally, the internal audit function itself evolves to become a partner in clarity and strategic insight.

Conclusion

Strategy is not “sacred ground.” It is shared ground where internal audit belongs, not as an intruder, but as a guide, helping leadership see clearly and act wisely. Strategic audits keep organisations vigilant, ensuring that assumptions are tested, risks are surfaced early, and strategies remain relevant.

Just as regular health check-ups protect us from unseen illnesses, strategic audits protect organisations from strategic blindness. In a world defined by volatility and disruption, those who audit their strategies are the ones best positioned for long-term success.

(The writer is a Senior Chartered Accountant with over 20 years of experience, primarily in the banking sector, and is currently serving as AGM – Audit at one of the leading banks. He is also a CISA-certified auditor (ISACA) and a visiting lecturer at PIM, CA Sri Lanka, and IBSL.)