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Presented By:
Mwalimu D.G Ngwalo
1
3.1 Nature of an External Audit
➢Purpose: To develop a finite list of opportunities that could
benefit a firm & threats that should be avoided.
➢Not aimed at developing an exhaustive list of every possible
factor that could influence the business, rather;
➢Aimed at identifying key variables that offer actionable
responses.
➢Firms should be able to respond either offensively or
defensively to the factors…HOW??
❑By formulating strategies that take advantage of external
opportunities or that minimize the impact of potential threats.
Cont....
Cont....
3.2 The Process of Performing an
External Audit
➢Must involve as many managers & employees
WHY ???
oLead to understanding & commitment from
organizational members
oAppreciate having the opportunity to contribute
ideas
oTo gain a better understanding of their firm’s
industry, competitors, and markets
Cont.… Process of Performing
Gather competitive intelligence &
information about “E,S,C,P,E,L,T,G,D”
Assimilated and evaluated
Cont.…
➢Firstly:-
oA company must gather competitive intelligence &
information about:-
▪Economic
▪Social
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