Resource Audit | Meaning | Types | General Guidelines
Table of Contents
What is a Resource Audit?
Audit conducted to understand the strengths or weaknesses of the resource base of a firm is called a resource Audit. In other words, the quality of resources available to implement the strategy can be known though resource audit. Strategic capability can be better understood through resource audit.
Types of Resource Audit
The resource base includes
- Physical resources,
- Human resources,
- Financial resources and
1. Audit of Physical Resources
The audit of the physical resources includes listing of physical resources like machines, building, equipment etc, their age, condition of work, life span, capabilities, location etc.
2. Audit of Human Resources
Human resource audit includes assessing, verifying and listing out the number of employers, their skill inventory, age inventory, qualification-wise inventory, knowledge wise inventory and capability-wise inventory.
3. Audit of Financial Resource
Financial resource audit includes analysis and listing out sources and uses of financial resources, capital structure, working capital, accounts receivables, control of
debtors and creditors, relationship among shareholders, bankers, debenture holders etc.
4. Audit of Intangibles
The resource audit exercise should not forget the intangibles. Intangibles have value like goodwill. Goodwill plays vital role in service-oriented organizations, retail organizations etc. Good will is represented by the brand image, customer loyalty, congenial contacts and relations, public image about the firm, quality and reliable service etc.
General Guidelines on Resource Audit
1. The Resource audit should take into considerations all resources necessary for the implementation of the strategy.
2. The audit should not restrict to the legally recognized assets.
3. The Resource audit should also consider the resources/assets outside the organization. These assets include networks, contacts with the customers, dealers, suppliers etc.
4. The Resource audit should also point out the organization’s distinctive capabilities in addition to the resources necessary for strategy implementation.