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INTERNAL AUDIT

Auditing Technique

Det Norske Veritas AS. All rights reserved Slide 210 June 2009

The Purpose

WHY AUDIT?


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Management System Audit

Whats done in an audit ?

Effectiveness of an organisations Management System is assessed


Why Audit

Required by the standard

Determine system effectiveness

Identify existing nonconformities

Highlight areas of strength

Point out areas for improvement

Indicate requirements forcorrective and/or preventiveaction


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Management System

Management System:- to establish objectives and to achieve those objectives

Quality Management System:

- to direct and control an organisation with regard to quality

System:

- set of interrelated or interacting elements


System Audit

The process of assessment has to be

OBJECTIVE


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System Audit

Assessment is a comparison of implemented Quality System with QualitySystem Standards like ISO 9000 or, implemented OHS system withOHSAS18001

However results depend on Auditor

- hence this training


What is sought by Auditor

Established Policy and Objectives

Developed appropriate systems

Necessary documentation of the system

Effective implementation of those systems

Since we can never expect absolute perfection the auditor can onlyassess

The Degree of Compliance


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System Standards

Lay down principles that require interpretation

The auditor must have very strong understanding of principles to be able

to assess whether the standard has been

- understood

- interpreted

- and can demonstrate adequate control


Questions in an auditors mind

Is the system right and sufficient?

Does the organisation do the right things to adequately control quality ofproducts or safety of employees?

Does the organisation do things properly all the time?

What is the evidence that things are done correctly?


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Nagging questions

What is adequate?

When is a thing properly done?

How much evidence is required?

Buzz group : You are sent as an auditor to Purchase department and one of thearea to be verified is Issue of Purchase orders in time. How would you answerall the above questions ?


Auditor

Needs to judge whether an organisation has arrived at a sensible andacceptable interpretation of the standard;therefore he must

- study the standard to improve understanding

- objective of the system is that performance must be consistently achieved

- consider possible consequences of something going wrong due toinadequacy

- take account of others opinion

- always use common sense


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Auditor

Looks for:- established policies and objectives

- developed appropriate systems

- documentation to ensure adequate control

- effective implementation of the system

Since we can never expect absolute perfection, the auditor can onlyassess

THE DEGREE OF COMPLIANCE


System Audit

Systematic, independent and documented process for obtaining evidenceand evaluating it objectively to determine the extent to which the audit

criteria is fulfilled


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Types of Audit

Internal Audit

External Audit

Third Party Audit


Auditor Competence

Auditors demonstrated capability to apply knowledge and

skills

based on

- education

- experience

- training

Qualification process:

- process to demonstrate the ability to fulfil specified requirements(in this case the auditors qualification)


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Audit conventions

Audits create stress. Uncertainty amplifies stress

- Act predictably


Why conventions?

To reduce stress

To have clear methods of audits


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Audit conventions

Start at the top Audit must be planned

Examination/Evaluation

Reports

Follow up action


Types of audit

Process

Product

Quality System

Compliance

Health & Safety

Environmental

Financial


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WHAT IS AN AUDIT?

A health check Key words

- Systematic

- Documented

- Periodic

- Objective

- Verification


KEY CONCEPTS

Verification Evaluate compliance to requirements

Systematic Carried out in accordance to set protocols

Periodic Conducted to established schedule

Objective Auditors have some independence and findings need evidences

Documented Reports are prepared


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AUDIT TERMINOLOGY

Audit Cycle:- period over which ALL

parts of organisation

are audited

Audit Programme:

- timetable within audit cycle

- shows whats audited, when and by whom


AUDIT TERMINOLOGY

Audit Protocol/Procedure:

- detail of individual audit including:

- audit scope

- audit frequency

- audit methodologies

- personnel and experience

- documentation required

- reporting and distribution


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AUDIT SCHEDULING

Unscheduled - usually prompted by:- Significant change in personnel

- Change in regulations

- Process change

- Customer complaint


Process to be

Audited

02

Q1

02

Q2

02

Q3

02

Q4

03

Q1

03

Q2

03

Q3

0

Q

Procurement x x

Marketing x x

Design

x x x xQuality Assurance x x x

Production x x

AUDIT PROGRAMME


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Actual

Performance

Time

audit&

review

audit&

review

audit&

review

contin

ualim

prove

ment

Baseline 1

Baseline 2

Baseline 3

HOW TO ACHIEVE CONTINUALIMPROVEMENT


AUDIT TEAM REQUIREMENTS

Audit team should include experience as:

- Team leader

- Systems auditor

- Technical specialist

- If not resourced internally then externally


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AUDIT TEAM REQUIREMENTS

Audit team preferably to have 2 persons:Auditor and Second Man- Second Man

- looking while the auditor is questioning

- listening and taking notes

- helping share load

- corroborating findings

- helping draft NCs

- assists reporting


STAGES OF AN AUDIT

Pre-audit activities

Audit activities

Post audit activities


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CONDUCTING AN AUDIT

Pre-Audit- Agree the scope and standards of the audit

- Establish methods of assessment

- Select auditors

- Allocate time frame

- Review documented MS

- Research other background information (requirements)

- Plan the audit (checklists etc.)


Audit by departments

Audit by clauses

Auditing by process , risk , aspects

Auditing Approaches


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Checklists are advised they are not mandatory

They are an auditors Friend

PRE AUDIT PLANNING: CHECKLISTS

ADVANTAGES

useful guide to the audit process

records evidence

record of audit

part of report

good help for beginners

Requirements will be researched

Helps pace the audit

Acts as a prompt

DISADVANTAGES

preparation time needed

blinkered view

somewhat cumbersome


AUDIT ACTIVITIES

Opening meeting

Review documents

Interview

Collect evidence/site inspection

Closing meeting


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AUDIT ACTIVITIES INTERVIEWING SKILLS

Explain why asking a particular question Ask a question in different ways if not understood

If auditee becomes stressed - take a break!

Speak to supervisor first


Audit Activity

Auditor refers the checklist, which is a question to himself. He then asks relevantquestions to the auditee.

Looks for factual evidence

- compliance to requirement

- effective controls of activities which could affect quality

- records to verify if system works

- are relevant procedures available with the doers

Probing

Questioning


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Audit Activity

Listening ( test )- (take notes but get the information first)

Verifying

- (please show me)

Believe a Confession

Verify a Claim

Looking

- (try to look at everything and you see nothing)


Examination

of Documents

Verification


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Observation of

Activities and

Conditions

Verification

Audit where the action is!- task observation is a powerful method of verification


Review requirements vs. records

Observe practice vs. requirements

Conduct interviews

to verify awarenessand understanding

Check how is routine work handled

Does the system work when something non routine comesup?

Are things in control in a crisis?

How to Collect

Objective Evidence


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What? Why?

When?

How? Where? Who?

AUDIT ACTIVITIESINTERVIEWING SKILLS


AUDIT ACTIVITIES

INTERVIEWING SKILLS

Closed Question

- Do you know measurement of noise level in ambient air?

Open Question

- How noise level in ambient air is measured ?


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AUDIT ACTIVITIES INTERVIEWINGSKILLS

DEVELOPING A QUESTION TECHNIQUE- Show me!

- I dont understand, please explain ....

- What if ......?

- Are you saying that ......?

- Silent approach

- Puzzled look

- Good or You have that under control!


AUDIT ACTIVITIES

INTERVIEWING SKILLS Ensure interviewee:

Hears or sees what you tell or show them

Understands what they have heard

Agrees with what they have heard or seen

Takes action

Provides feedback


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AUDIT ACTIVITIES

Make a note of audit sample

- identification of person

- identification of documents/records

- identification of contract numbers/product/equipment

At the end of each department verbally summarise the audit findings

- this gives a chance for auditee to correct you

- confirms with auditee the findings

Auditor must be in control!


AUDIT ACTIVITIES

If something is wrong:

Do not criticise

Investigate

Do not stop the job

Do not undermine supervisor

Record specific details

Also record compliances!


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AUDIT ACTIVITIES

Be objective Persist if a

non-conformity exists

Dont get annoyed

Dont take sides

Make your own judgements

Plan time effectively

Be positive


AUDIT ACTIVITIES

Exercising Judgement

- what is the requirement

- how to investigate

- what to investigate

- who to speak to


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INTERVIEWING SKILLS

On completion- say Thanks!


POST AUDIT ACTIVITIES

Audit reporting - distinguish between

- observations

- interpretations

- assessments

- judgements

- opinions

- advice

- Recommendations

- Non-conformities


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Requirement Failure Evidence

WRITING OF NON-CONFORMITIES

Non-conformities must be basedon objective evidence


Audit Observation

CASE STUDY


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REMEMBER

The thoroughness and integrity of the internal audit might go some wayto doing the certifiers work

- external auditors can rely on and therefore use in their own audit many

of the internal audit results


Open forum

Discussion


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