The definition
A skills audit is a structured, point-in-time review of the skills an organization holds, measured against the skills it needs. It typically produces two artifacts: an inventory of current capability, and a list of gaps ranked by how much they matter.
It is worth separating from the things it is often confused with. An inventory is the record; the audit is the exercise that produces it. A training needs analysis is the decision-making step that comes after. And a performance review is a different question about a different unit — one person's contribution, not the organization's capability.
Scoping one so it finishes
The failure mode is breadth. An audit that covers every skill for every person becomes a project with its own governance, and by the time it reports, the organization has moved. Something that took eight months to describe the past is not a useful input to a decision about the future.
The alternative is to scope by decision. Name the two or three questions the audit exists to answer — can we staff this internally, where are we one resignation from a problem, which roles are systematically under-levelled — and audit only what those questions need. A narrow audit that lands in six weeks beats a complete one that lands never.
Why most of them stall afterwards
An audit produces a report, and a report is a satisfying thing to finish. It circulates, it is discussed, and then the organization returns to what it was doing. Nothing about the audit itself prevents this, which is why the follow-through has to be planned before the audit starts rather than after it delivers.
The concrete version of follow-through is a small number of development plans, each with an owner and a date, created from the audit's own gap list within a fortnight of it landing. If that does not happen while the findings are still fresh, it does not happen at all, and the next audit starts from the same place as this one.