Research On Enterprise Performance Audit And Assessment Based On The Balanced Scorecard Approach

Along with the arrival of knowledge economy area, enterprise performance audit and evaluation has become the focus of current internal audit and management audit practice for Chinese enterprises. Its core points involve the type of indexes adopted, assessment objectives and measures, as well as how to evaluate the performance.The traditional performance audit and evaluation system is mainly based on accounting data and analysis, taking financial index and outputs as major guidance. However, people gradually recognize that this method has obvious weakness and vagueness concerning performance evaluation range, objective and measurement, which result from the contradiction between financial output limitation and enterprise operational activities. It tells the story of short-term profits, past events and investor benefits, which is adequate for industrial age companies for which investments in long-term goal, future value creation and customer feedbacks are not key success factors.But at the coming of more competitive market and shorter life cycle of products and services, the previous management approach might not work any more to guide and evaluate the journey that information age companies must make to create economic value added (EVA) through investments in all stakeholders, processes, technology and innovation. Instead, some non-financial factors such as enterprise creativity and sustainability become critical to successfully compete. Therefore, enterprise performance audit and assessment must transform to a new method and technology to accommodate to this significant change.The Balanced Scorecard (BSC) Approach was developed by professors of Harvard Business School, Robert Kaplan and David Norton, in the early 1990s to enable enterprises to clarify their vision and strategy and translate them into action. It is a management system rather than a measurement system, providing a clear prescription regarding what enterprises should measure in order to balance their financial perspective. It retains traditional financial measures, but at the same time introduces customer relationship, internal business process, and learning and growth perspectives. If fully deployed, the BSC can integrate internal business process and external outcomes, financial and non-financial measures, as well as evaluation criteria and competitive advantages, and transform strategic planning from an academic exercise into the nerve center of an enterprise.This paper first introduces the theories of enterprise performance audit, performance evaluation and the BSC, stating upon the possibility and feasibility of applying the BSC to enterprise performance audit and assessment. Then it establishes a model to elaborate how to employ the BSC into practical use. This model takes strategic goal and operational objective as the foundation to design the expected BSC system, adopt Analytic Hierarchy Process (AHP) to define metric weights, build the BSC assessment matrix and evaluate differently grouped enterprise performance according to the matrix calculation results. Last, based on the discussed theory and practice, the paper frames out a specific BSC system for Group A to help continuously improve its strategic performance and results, thus verify the feasibility of the BSC application to enterprise performance audit and assessment.The advantageous worth of this paper is that it prepares a practical BSC approach that is applicable to Chinese modern enterprise performance audit and assessment system. Such a system, which exceeds the traditional one, can consolidate the financial and non-financial evaluation factors, quantitive and qualitative measurements as well as long-term and short-term metrics. Also, it attaches much importance to enterprise strategic competitiveness reassessment, therefore reflects more objectively the true performance of an enterprise.Besides, this paper provides a practical case scenario summarized from my working experience, in which the BSC approach is put into use to audit and assess Group A's performance to testify all theory and practice explored above. I hope this would be helpful for achieving its strategic goal and improving its performance evaluation for Group A.