Looks like I am in a focused drive of differentiating between confused terms – here is another one that I have been prompted to write about:

How do we differentiate  Assessment and Audit

Add the term ‘gap-analysis’ on to that, you take the confusion further!

As always, let us look at the typical definitions of the terms (all definitions gathered through google search from different sources)?

Audit: a few definitions that will help us differentiate this from ‘Assessment’:

  • ‘Examine carefully for accuracy with the intent of verification’ 
  • ‘A systematic, independent and documented process for obtaining evidence.’

From these definitions, it is clear that ‘audit’ is a verification against some thing – or gathering evidence of adherence/compliance to some thing: That some thing can be a global/regional/local standard, regulatory requirements, financial policies, internal management systems – policies/processes/procedure.

And yes- there are many other definitions that google threw in, which further mixes up the two terms like:

  • “The most general definition of an audit is an evaluation of a person, organization, system, process, project or product. Audits are performed to ascertain the validity and reliability of information, and also provide an assessment of a system’s internal control.”(Source: Wikipedia) – The word assessment here , is just a representation of the usage of these two terms in an overlapping manner.

Now, let us look at Assessment:

  • The act of assessing or an amount (of tax, levy or duty etc) assessed; An appraisal or evaluation
  • Assessment is the process of gathering information to make decisions

 Assessment is NOT verifying some thing against a set standard/policy/process. It is gathering data, quantifying and evaluating those to come up withe a clear understanding on – capability, maturity, quality, value etc of the object (people, process, technology, organization) that is being assessed ; and yes, this understanding helps greatly in decision making and moving forward.

Gap Analysis:

  • a tool enabling an organization to compare its actual performance with its potential performance. At its core are two questions: “Where are we?” and “Where do we want to be?”
  • The difference between what is needed and what is available. The difference between ‘where you are’ and ‘where you want to be’.

a.  Assessment vs Audit:

Some real life examples where there is some amount of in-built clarity between Audit and Assessment:

  • A student is assessed (and not ‘audited’!!) through his/her final exam- theory and practical, based on he is promoted to the next grade. 
  • A real estate property is assessed (again, not audited!) for its current market value – based on many factors like location, market demand etc – and that value will drive decisions in terms of selling price, tax etc.

Now,

  • The student may be audited for evidences of him adhiring to the exam rules and regulations (and to ensure there are no evidence of cheating :-))
  • The property and its owner could be audited to ensure they are adhering/complying to the regulatory, tax,legal requirements etc.

Assessments are usually intended for decision making and/or setting directions (forward looking); where as audits are intended at verification/assurance (looking back).

b. Assessment vs Gap Analysis:

For me – Gap analysis is different from Assessment – in the fact that always compares the object against some set level/goal/target (that could be a desired performance level or a standard/compliance requirement), where assessment need not be against some thing. 

Or let us summarize this way:

  • Both Gap analysis and Assessment evaluates the answer to the question – ‘Where are we?’ –  but in case of Gap analysis – it is always against ‘where we want to be’

Both Assessments and Gap analysis are usually intended for decision making and/or setting directions (forward looking), unlike Audits.

c. Gap Analysis vs Audit:

They both are similar – in that both checks the object against some thing ( as discussed above).

But they are very much different too- in that Gap analysis is usually forward looking; for setting direction, planning etc and Audit is on hindsight, focusing on verification, evidences etc for certification/assurance.

I would like to elaborate a little further on how to make use of these concepts in one initiative. Will do in another blog soon. 

Any further views and discussions on these are welcome…

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