Mid-Year Audit

Steven Cesare, Ph.D.

A business owner from Kentucky called me the other day to talk about his company’s overall year-to-date performance. Naturally, the narrative consisted of myriad strengths and weaknesses, actions items, and change management concerns. Lamentably, the business owner’s focus lacked a suitable strategic structure essential to ensure his organization’s systems were in alignment and predictive of success. As such, I recommended he conduct a mid-year audit to reorient the company’s direction for the second half of the year. Congruent with the Balanced Scorecard, here is a sample of the audit items I proposed to him.

Financial

How do the current mid-year results for each revenue stream compare to the results for the same timeframe across the rolling three-year average?
What three key drivers are responsible for the mid-year revenue status of the company?
Based on the rolling three-year average, what is the current YTD ratio of monthly enhancements to monthly contracts (or change orders to original construction bid)?
What is the current company debt-to-equity ratio, and how does that metric compare to the rolling three-year average and the trend line for the remainder of this fiscal year?
Relative to the rolling three-year average, what are the current percentages of outstanding Accounts Receivables for the past 30, past 60, and past 90 days?

Employees

Relative to the rolling three-year average, what is the current field employee (e.g., Laborers, Foremen, Irrigators) retention rate?
What is the average length of time a vacant field position has remained unfilled YTD?
Relative to the rolling three-year average, how many work-related injuries have occurred YTD?
What percentage of field employees are fully trained and certified?
How many job applications for field positions has the company received per week YTD?

Efficiency

Compared to the rolling three-year average, what is the current YTD percentage of direct expenses, indirect expenses, administrative expenses, and net profit relative to overall company revenue?
Based on the rolling three-year average, what are the current YTD Hourly Average Wage, Burden Rate, and Revenue per Man rates for each revenue stream?
What are the current YTD variances between estimated price and actual price for all maintenance, enhancements, construction, and irrigation work?
What specific cost containment initiatives were developed at the beginning of this fiscal year, and what is their current and projected year-end status?
Relative to the rolling three-year average, what are current overtime summary rates (e.g., percentage of total regular hours, overtime pay)?

Customer

How many current jobs have received two customer complaints or a negative online review YTD?
Is the current sales pipeline at the expected 5x sales goal of proposed maintenance revenue (i.e., 3x for proposed construction revenue)?
Has the New Client List expanded by at least 25% this fiscal year?
Relative to the goals established in January, what is the average quality score for each current job?
What are the current results of the company’s social media strategy (e.g., clicks, reach, shares, engagement rate, followers)?

Hopefully, the information culled from the mid-year audit questions above will lend guidance, purpose, and urgency to ensure the second half of the fiscal year enables the company to achieve its annual business goals, while establishing a sound platform for next year’s strategic plan and financial budget.

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