ARTICLES

Strategic Planning in Supreme Audit Institutions

Introduction

A strategic plan is a set of management decisions about what the organization will do to be successful. It is a management tool used to help an organization do a better job- to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment. Strategic planning — defining long-range goals and strategies that further the organization's vision and mission — provides a solid framework for identifying needed resources in equipment, capital, and personnel. The plan supplies a solid basis for operational tactics and for educating employees as to future business direction and priorities:

• Which way are the winds of change blowing for our organization?

• How can we build and sustain our strengths?

• How can we best grow and transform ourselves?

• Which areas of activity will yield the best results or be our main focus?

• Have we specified precise improvement goals that will make a difference?

These are just a few of the questions that quality strategic planning poses and answers.

Strategic Planning Process

Dwight D. Eisenhower said it best: "Plans are nothing, planning is everything." While strategic planning activities will result in a document, the document itself matters less than the process of collecting and analyzing input, and thoughtful discussion and debate. The key to a successful plan is to follow a systematic planning process. The important stages normally involved in the strategic planning process, with specific reference to the practices followed in International Organization of Supreme Audit Institutions (INTOSAI) and various Supreme Audit Institutions (SAIs) are explained below:

1. Getting Ready

To get ready for strategic planning, an organization must first assess if it is ready. While a number of issues must be addressed in assessing readiness, the determination essentially comes down to whether an organization's leaders are truly committed to the effort, and whether they are able to devote the necessary attention to the "big picture". For example, if a funding crisis looms, the Auditor General is about to depart, or the environment is turbulent, then it does not make sense to take time out for strategic planning effort at that time. An organization can consider itself ready when the top management is firmly committed to the strategic planning exercise; there is reasonable assurance of continuity in the top management for the next 3-5 years; and there is no impending crisis facing the organization. An organization that determines it is indeed ready to begin strategic planning must perform five tasks to pave the way for an organized process:

• identify specific issues or choices that the planning process should address: The Auditor General of Canada identified the following five issues that she wishes to focus on during her term: accountability to the Parliament; effective public service; wellbeing of Canadians; aboriginal issues; and legacy and heritage. These focus areas formed an integral part of the strategic plan and helped in formulating the plan.

• clarify roles (who does what in the process)

• create a Planning Committee : A Strategic Planning Task Force headed by the Comptroller General of the United States, consisting of representatives from all regions of INTOSAI was constituted to prepare the INTOSAI Strategic Plan.

• develop an organizational profile

• identify the information that must be collected to help make sound decisions.

The product developed at the end of this stage is a Work plan to the strategic plan.

2. Assessing the situation

An organization must take a critical look at itself and the environment in which it operates. The process begins with an internal analysis of each major operation, e.g., financial audit, performance audit, international relations, human resources etc. This internal analysis is overlaid against an analysis of external developments such as needs of Parliament, public and other users of audit reports, preferences and satisfaction levels of users, economic conditions like fiscal deficits, computerization of audited agencies and competitive pressures, if any. Basically, a Strength, Weakness, Threats and Opportunities (SWOT) analysis of the organization could be carried out. This will help in answering the questions

• Strength – internal factor–"what does the organization do well ?

• Weakness – internal factor – "where can the organization improve?"

• Opportunities – external factor –"what environment changes are taking place that will allow the organization to better achieve its mission?"

• Threats – external factor – "What are the environment changes which the organization should guard against or prepare for?"

The results of SWOT analysis will help in identifying critical issues that the organization must address, as well as in defining strategies (stage 5) which will be discussed later.

The Strategic Plan of Australian National Audit Office (ANAO) lists out an increasing focus on the delivery of programs and services through outsourcing; the growing emphasis on sustainability and the associated need for audit assurance; and increasing use and complexity of information technology are some of the important environment factors influencing the organization's strategic plan. Increasing security concerns, global interconnectedness; and large and growing fiscal imbalances are cited as few environment issues that have impacted the strategic plan of General Accounting Office (GAO) of the United States. Goal 4 of the INTOSAI Strategic Plan of 2005-2010 is to function as a model international organization and focuses on internal reorganization and governance issues. This goal has arisen as a result of a critical assessment of the internal functioning of the organization.

The end product of situation assessment is to highlight the critical issues that the organization faces and that its strategic plan must address. These issues could include a variety of primary concerns, such as funding issues, new opportunities, changing regulations or changing needs of the users and so on.

3. Articulate Mission, Vision and Values

a) Mission

A mission statement must communicate the essence of an organization to the reader. An organization's ability to articulate its mission indicates its focus and purposefulness. A mission statement normally answers the following three questions:

• What do the organization do?

• How does the organization do it?

• For whom does the organization do it?

The Mission of a few SAIs is given below:

INTOSAI – "INTOSAI is an autonomous, independent, professional and non-political organization established to provide mutual support; foster exchange of ideas, knowledge and experiences; act as a recognized voice of supreme audit institutions within the international community; and promote continuous improvement among diverse SAIs"

GAO- "GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people" ANAO – "The ANAO independently audits public sector administrative performance and accountability regimes to provide assurance to the Parliament about their efficiency and effectiveness including how that might be improved" (This has been defined as the role of ANAO)

Comptroller and Auditor General of India (CAG) – "To enhance accountability of the Executive to the Parliament and State legislatures by carrying out audits in the public sector in accordance with the Constitution of India and Laws as well as best international practices" (mission relating to audit work has been extracted)

b) Vision

Martin Luther King, Jr. said, "I have a dream," and what followed was a vision that changed a nation. That famous speech is a dramatic example of the power that can be generated by a person who communicates a compelling vision of the future.

Management author Tom Peters identified a clear vision of the desired future state of the organization as an essential component of high performance. A vision statement presents an image of what success will look like. A vision is quite literally a mental image of the successful accomplishment of the mission, and thus the purpose of the organization.

The Vision of a few SAIs is given below: INTOSAI – "promote good government by enabling SAIs to help their respective governments improve performance, enhance transparency, ensure accountability, maintain credibility, fight corruption, promote public trust, and foster the efficient and effective receipt and use of public resources for the benefit of their peoples"

National Audit Office, United Kingdom (NAO) - "to promote the highest standards in financial management and reporting, the proper conduct of public business and beneficial change in the provision of public services" Auditor General, South Africa – "We are the independent world-class provider of public sector audit and related value-added services"

ANAO - "An international leader in the provision of independent public sector audit and related services"

CAG, India – "To promote excellence in public sector audit services towards improving the quality of governance"

A comparison of the vision statements reveal that providing public sector audit services with a view to be a world leader, or to improve governance, or to support the Government in improving provision of services for the benefit of people seems to be the vision of the SAIs.

c) Values

Values are beliefs which an organization's members hold in common and endeavour to put into practice. The values guide an organization's members in performing their work. The values identified by some of the SAIs are:

INTOSAI – Independence, Integrity, Professionalism, Credibility, Inclusiveness, Cooperation and Innovation

GAO – Accountability, Integrity and Reliability

OAG, Canada – serving the public interest, independence and objectivity, commitment to excellence, respectful workplace, trust and integrity, leading by example

National Audit Office Denmark (NAOD)- Integrity, targeted, cooperation, attractive workplace, flexibility

State Audit Office, Finland – expertise, objectivity, cooperation, courage and effectiveness

Not surprisingly, integrity emerges as the core value of all SAIs as it is of utmost importance in deciding the acceptability of the SAI work and its ultimate effectiveness. Professional excellence and creating a conducive work environment also appear as popular values amongst the SAIs.

It is important to remember that importance and relevance of values get diminished if they are simply stated in words. The strategic plan document should briefly explain each value and the action that can be taken to achieve the values. The Strategic Plan of OAG, Canada describes each of the values and an example is given below:

Lead by example – "we strive to be a model organization for the federal government. We treat people fairly. Our audit plans are strategic and risk-based, our reports are focused on results, and our effectiveness is measured and reported annually to the Parliament. Our practices and policies are aligned with our vision and values, and our processes are economical, efficient and responsive"

4. Develop strategic goals

The critical issues identified from situation assessment (stage 2) and the mission statement articulated (stage 3) should be used to set the strategic goals that the business wants to accomplish over the next three to five years. If strategic goals can be achieved in one year, it indicates that the strategic planning participants have not stretched their strategic vision far enough. A goal should be set for each critical issue area pinpointed as a result of assessing the situation.

This can take considerable time and flexibility: discussions at this stage frequently will require additional information or a reevaluation of conclusions reached during the situation assessment. It is even possible that new insights will emerge which change the thrust of the mission statement. It is important that planners are not afraid to go back to an earlier step in the process and take advantage of available information to create the best possible plan.

Some strategic goals identified by SAIs in their plans are as below: INTOSAI – "encourage SAI cooperation, collaboration and continuous improvement through knowledge sharing, including providing benchmarks, conducting best practice studies, and performing research on issues of mutual interest and concern" (Goal 3 of INTOSAI Strategic Plan 2005-2010)

INTOSAI Development Initiative (IDI) – "explore the potential of distance learning programmes" (Goal 5 of IDI Strategic Plan of 2001-2006)
GAO – "help transform the Federal Government's role and how it does business to meet the 21st century challenges" (Goal 3 of GAO Strategic Plan of 2004-2009)

National Audit Office of the Republic of Lithuania – " To promote implementation of modern financial management and control systems in the public sector" (Goal 3)

5. Define Strategies

(Taken from “Strategic Planning for Nonprofit Organizations: A Practical
Guide and Workbook”, Michael Allison & Jude Kaye)

Defining strategies is explained with reference to the strategic goals of INTOSAI and GAO referred earlier:

INTOSAI – Strategies to achieve Goal 3 on knowledge sharing/knowledge services

• Establish new and maintain existing working groups of INTOSAI

• Facilitate best practice studies, consistent with diversity and sovereignty considerations

• Develop a global communication policy and strategy

• Promote partnerships with academic/ research institutions, consistent with INTOSAI's independence requirements

GAO – Strategies (referred as objectives) to achieve Goal 3 of transforming Federal Government

• Re-examine federal government's role in achieving evolving national objectives

• Support the transformation to results-oriented, high-performing government

• Support Congressional oversight of key management challenges and program risks to improving federal operations and ensuring accountability

• Analyze the government's fiscal position and strengthen approaches for addressing the current and projected fiscal gap.

It can be seen as to how the strategies of these two organizations are closely aligned to achieve their goals.

6. Completing the written plan

Once the mission has been articulated, the critical issues identified, and the goals and strategies agreed upon, this stage essentially involves putting all that down on paper. Usually one member of the Planning Committee will draft a final planning document and submit it for review to all key decision makers. This is also the time to consult with senior staff to determine whether the document can be translated into operating plans (the subsequent detailed action plans for accomplishing the goals proposed by the strategic plan) and to ensure that the plan answers key questions about priorities and directions in sufficient detail to serve as a guide. Revisions should not be dragged out for months, but action should be taken to answer any important questions that are raised at this step. It would certainly be a mistake to bury conflict at this step just to wrap up the process more quickly, because the conflict, if serious, will inevitably undermine the potency of the strategic directions chosen by the planning committee. Important activities involved at this stage are:

Communicate the plan to all those involved in putting it to work and obtain feedback: The draft strategic plan of IDI was circulated to 144 member SAIs and their feedback obtained in determining the priority of strategic goals. Feedback on the draft strategic plan of GAO was obtained from the members of the Congress, State and local government audit institutions and from other accountability organizations. The entire organization was involved in finalizing the values of NAO, Denmark.

Identify People responsible for the plan areas: The people responsible for implementing various goals and strategies should be clearly identified to ensure accountability. Many plans fail as there is no clear specification of who is responsible for what. The Strategic Plan of CAG, India clearly specifies the Goal Manager and the Goal Supervisor for every goal. The Strategic Plan of INTOSAI identifies the Goal Liaison for various strategic goals.

Prepare detailed action plans: Detailed action plans or annual plans have to be prepared to implement the goals and strategies, so as to facilitate periodic monitoring of the implementation of the plan. The Strategic Plan of CAG, India requires the goal managers to prepare action plans to achieve the goals. The plan of NAO, Denmark contains annual plans for achieving the strategic plan.

7. Monitoring and evaluation

Many well drafted strategic plans have remained only in paper because of the grave misconception that a well written plan will automatically produce the desired results resulting in inadequate attention on monitoring and evaluating the plan. The key steps involved in monitoring and evaluating the plan are:

• Define performance measures: Performance measures have to be defined to assess progress towards goals and strategies over the period of the plan. GAO's strategic plan explains various quantitative and qualitative performance measures to assess progress. A scorecard of performance measures is an integral part of ANAO's plan against which progress is reported in its annual report.

• Evaluate progress towards the plan: A clear specification of the periodicity of evaluation and the evaluating members goes a long way in systematic evaluation of progress. A committee of senior members of the organization could be constituted to evaluate progress. The IDI Strategic Plan refers to an evaluation framework in which responsibilities for data collection and analysis in order to evaluate progress is clearly delineated.

• Reward successful performance against the plan

• Review and update the plan annually

Benefits of Strategic Planning

A thoughtful strategic plan, based on rich input from users of the audit reports, employees, and other stakeholders will enable an SAI to:

Establish priorities. Define in measurable and objective terms what is most important and needs to be achieved by the SAI. Given the resource constraints, SAI will not be able to audit all areas with the same intensity and the Plan will establish priority areas for audit.

Do proactive problem-solving. Anticipate problems and take positive steps to eliminate them as the threats to the SAI will be identified at the stage of situation assessment.

Develop commitment to common purpose. Build orientation and commitment to a common purpose among members of the SAI's management team.

Set organization direction. Chart a clear direction and furnish "marching orders" for the SAI and its employees to follow.

Set the stage for effective decision-making. Once the priority areas and the strategic goals are known, decision-making and allocation of resources become objective in areas such as staff, equipment, facilities, product/service changes, systems, etc.

Keep management "light on their feet." Provide a management framework which can be used to facilitate quick response to changed conditions, unplanned events, and deviations from plans as a result of periodic evaluation of progress and annual review of the plan.

Summary

Strategic planning is a disciplined and systematic decision making process that gives a clear direction to the organization, establishes priorities and enables objective decision making. However, strategic planning is only a management tool and not a substitute for the exercise of judgment by leadership. It involves the stages of getting ready for the plan, assessing the situation, articulating mission and vision for the organization, developing strategic goals, defining strategies to achieve the goals and finally writing down the plan and implementing.

Finally, strategic planning, though described as disciplined, does not typically flow smoothly from one step to the next. It is a creative process, and the fresh insight arrived at today might very well alter the decision made yesterday. Inevitably the process moves forward and back several times before arriving at the final set of decisions. Therefore, no one should be surprised if the process feels less like a comfortable trip on a commuter train, but rather like a ride on a roller coaster. But even roller coaster cars arrive at their destination, as long as they stay on track!

References

1. "An organization that doesn't plan its future isn't likely to have one" by Ronald A. Gunn

2. Website of Alliance for Nonprofit Management, a professional association of individuals and organizations devoted to improving the governance capacity of nonprofits @ http://www.allianceonline.org/FAQ/strategic_planning

3. Website of Leadership Strategies @http://www.leadstrat.com/library/articles.asp

4. "Ten pitfalls of strategic planning" by Michael Wilkinson

5. Websites of Audit Institutions @ www.intosai.org, www.anao.gov.au, http://www.idi.no/english/aboutus.asp, http://www.nao.org.uk/about/vmv.htm, www.gao.gov/sp.html, http://www.oag-bvg.gc.ca, www.vtv.fi, http://www.ftrr.dk, http://www.vkontrole.lt/en/activities_mvv.shtml, http://cagofindia.delhi.nic.in, http://audgen.gov.ie, http://www.agsa.co.za