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HOME BROWSE JOURNALS & BOOKS MANAGERIAL AUDITING JOURNAL VOLUME 15, ISSUE 6
GENERIC AUDIT OF MANAGEMENT SYSTEMS: FUNDAMENTALS
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Generic audit of management systems: Con la tecnología de Traductor de
fundamentals
Author(s): Stanislav Karapetrovic (Department of Industrial Engineering,
Daltech/Dalhousie University, Halifax, Nova Scotia, Canada)
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Abstract: As competition in the global economy grows, management

systems are becoming increasingly complex and diverse.
Management system audits, applied for the examination of Article Options and
system effectiveness and compliance with planned Tools
arrangements, seem to be following the same path. This

PDF Abstract
paper addresses the fundamental models, concepts,
principles and practices of management system auditing, Citation and Reference
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with the objective of improving the consistency and
effectiveness of audits across quality, environmental, Favourites
financial, safety, maintenance and other auditing disciplines.

The concept of a generic audit is introduced on the basis of
the systems approach. Discipline‐specific audit definitions
Journal Information
are analyzed, and a generic audit definition is depicted.
Quality, environmental and accounting audit principles are Managerial
Auditing
compared, and a set of basic features of a generic audit is
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illustrated and discussed. Common audit practices are
subsequently illustrated, followed by an outline of the
structure and content of a generic audit guideline together
https://www-emeraldinsight-com.loginbiblio.poligran.edu.co/doi/full/10.1108/02686900010344287 1/26
structure and content of a generic audit guideline, together
with the proposed two‐prong approach to the development

of the generic audit. ISSN: 0268-6902
Online from: 1986
Subject Area:
Keywords: Audit, Quality audit, Environmental audit, Audit standards, Accounting, Finance &
Economics
Systems theory
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Type: Technical paper Current Issue
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Publisher: MCB UP Ltd Earlycite
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Copyright: © MCB UP Limited 2000
Published by MCB UP Ltd
Citation: Stanislav Karapetrovic, Walter Willborn, (2000) "Generic audit

of management systems: fundamentals", Managerial Auditing
Journal, Vol. 15 Issue: 6, pp.279-294, MOST READ MOST CITED
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Article Agency Theory and the

Internal Audit
Introduction Section: Choose
Factors affecting the voluntary
use of internal audit: evidence
Wars of the future will not be waged for land or natural resources, but more so
from the UK
for information and knowledge. Whoever is able to collect and make use of the
Internal control effectiveness
relevant information from the extreme wealth of available data and intelligence, – a clustering approach
will win. Even today, knowledge of adequate and pertinent information helps The reliance of external
auditors on internal auditors
companies win the competition wars. Satisfying customers with the quality of
Audit quality
products and services is certainly one area of business that requires timely and
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reliable information. In order to achieve this objective, a company must know not
only what the customers want, but also whether its operations and resources are
adequate. Managers must retrieve the right information for proper decision Further Information
making. Do past performance and results indicate competent management? Do
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known mistakes demonstrate bad decisions or just out‐of‐luck situations? Which Sample Articles
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improvements would rectify the undesirable situation? Questions such as these
Editorial Team
demand correct and reliable examination of decision‐making processes and other Write for this journal
relevant criteria of business performance. A qualified and competent auditor can

conduct such an examination and then report the results to management.
Auditing as a source of information has become very useful in modern business,
especially with businesses’ increasing complexities and pressures for continuous
d t ti di t
adaptation and improvement.
When in recent years formal management system standards, such as the ISO
9000 series, were successfully adopted by international businesses, special
system auditing was concurrently introduced. A manager can call on an internal
or external auditor to assess the implementation of the company’s quality
management system. The auditor will then conduct an impartial and competent
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examination of the compliance of the system with appropriate standards, as well
as an evaluation of the system’s suitability to achieve quality objectives
(Karapetrovic and Willborn, 1998a). After an external audit by an accredited
registrar, in the case of confirmed compliance and suitability, the company
becomes publicly registered. With over 300,000 worldwide registrations to date,
ISO 9000 quality systems and quality audits have become a valuable support to
management. Increasingly, quality audits are being used for the primary purpose
of continuous quality improvement, and not strictly compliance to stated
requirements (Willborn and Cheng, 1994; Burr, 1997; Hunt, 1997; Russell and
Regel, 1996; Russell, 1997; Gardner, 1997; Walker, 1998; Barthelemy and Zairi,
1994; Wharton, 1997). This international success in the quality management field
spurned other disciplines, such as environmental management, to introduce their
own management system standards (ISO 14001, 1996) and respective auditing
guidelines (ISO 14010/11/12, 1996). Unfortunately, substantial differences among
the audits and audit guidelines of various management systems still remain
(Willborn, 1982, 1993; Karapetrovic and Willborn, 1998b). Responding to the
needs of business and the general public, making these audits more compatible
has become an important international issue.
In this paper, we examine the fundamentals of management system auditing,

looking for ways to improve audits from the management and the customer point
of view, and to address increasing requests for the harmonization of discipline‐
specific audits. The need for a generic audit solution is presented, followed by a
study of the definitions, concepts and the fundamental principles and practices of
auditing. Subsequently, the systems approach is used to illustrate the concept of
a generic audit. Interrelationships of the presented systems model and existing
quality and environmental audit guidelines are discussed, followed by an outline
of the structure and content of the proposed generic audit guideline. We
conclude with a statement on the applicability of this work to businesses and
standard writers who are directed to make management system standards and
corresponding audit guidelines more compatible and cost‐effective.
Audit: the need for a solution Section: Choose
When people think about audits, they commonly perceive some formal
examination of their tax returns by the governmental revenue services. If one
owns a business, accounting audits with the purpose of evaluating financial books
and activities may also come to mind. Audits have been a part of the accounting
profession for centuries. In recent decades, however, auditing processes have
emerged in other business disciplines. At first, quality professionals started to use
what they referred to as “quality audits” for evaluation of quality programs and the
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effectiveness of these programs to achieve quality objectives. Soon thereafter,
environmental auditing of corresponding management systems, as well as health
and safety audits, came forth. Today, you can audit your maintenance engineering
practices, ergonomic programs or even perform a social or ethical audit (Vinten,
1998a). Questions about the similarities and differences of discipline‐specific
audits naturally follow such developments. Are the fundamental principles of
auditing common to all disciplines? Are the auditing methodologies used similar
in nature? Are the levels of auditor qualifications and competence comparable?
How are audit programs, i.e. aggregates of individual audits, managed across
disciplines? Ultimately, if financial, quality, environmental, health, safety and other
types of audits are compatible and similar in nature, should they be somehow
aligned and integrated for the purposes of saving resources and eliminating
redundancies?
Pressing the issue of audit harmonization and integration is the related

development in management systems. The last 15 years have seen the explosion
of management system standards in the fields of quality assurance and
environmental management and the proliferation of industry‐specific guidelines
for management systems in automotive, telecommunication, software, health and
other industries. Faced with such a wealth of standards and guidelines describing
management systems, many companies have started aligning and integrating
their respective systems for quality, environmental and safety management (e.g.
Kurtzman and Brewer, 1997; Hofmann and Trory, 1996; Wilkinson and Dale, 1999;
Beechner and Koch, 1997, Karapetrovic and Willborn, 1998c and d). However,
when requiring registration of integrated management systems, the visits by
separate quality and environmental audit teams, performed according to different
schedules, at different times, and using different methods, would shatter their
expectations of a like integration of audits. And even if a registrar shows up with a
joint team of auditors, problems related to independent and unrelated internal
quality, environmental, safety and financial audits are far from being solved. The
following are just a few of such problems:
• duplication of efforts across different audit programs;
• inconsistencies in applying separate audit guidelines and procedures;

inconsistencies in applying separate audit guidelines and procedures;
• diminished cost‐effectiveness;
• disagreements among audit teams on common or related issues;
• unnecessary multiple interruptions of auditee departments;
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• misalignment of audit objectives and principles;
• lack of a unique and coordinated audit policy;
• difficult communication of contrasting audit results;
• missed synergy benefits (system is better than a sum of its parts);
• restrained sharing of resources and expertise of auditors;
• difficulties in internal auditing of integrated management systems.
All these difficulties, paired with the increased pressures for harmonization of
management systems and related audits (Karapetrovic and Willborn, 1998b,
Wilkinson and Dale, 1999), point to the fact that some changes in the direction of
alignment and integration of management system audits are required. However,
the extent to which these changes are to be performed still remains an open
question. Understanding the different issues and objectives that drive quality,
environmental, financial and other audits, as well as the distinct qualifications and
competencies of auditors, some companies simply request simultaneous audits of
their management systems. This would involve separate audit teams, under
separate management, but the audits would take place at the same time. Others
demand an additional level of harmonization, relying on a single audit team, with
team expertise spanning different disciplines. Such an approach would call for a
joint audit. In a joint audit, quality and environmental auditors may, for instance,
conduct their examinations separately, but would follow the same audit plan,
have the same team leader, and conduct a single opening/closing meeting. Yet
another level would require an integrated audit, where discipline‐specific audits
would lose their separate identities. Integrated audits require auditors competent
and qualified in several disciplines, and would be conducted as a single audit,
from planning and design, through execution, to reporting and completion.
Obviously, a solution is required that could accommodate these diverse requests,
and at the same time, provide for an integrative approach to management system
auditing. We believe that the concept of systems‐based generic auditing, together
with a sound generic audit guideline, will attain this objective.
In attempting to present this solution, we proceed with a discussion on the

meaning of the generic audit concept, and the proposed systems approach
framework.
Generic audit: the systems approach Section: Choose
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Generic audit
In the realm of management systems, “generic” is the term commonly used to
describe systems or associated frameworks that transcend industry or
geographical boundaries. For instance, ISO 9000 and ISO 14000 are generic
management system standards that are universally applicable to virtually any
organization, regardless of its size, place of business, ownership or market
environment. In particular, ISO 9000 standards have been successfully introduced
in manufacturing, service and non‐profit organizations in over 120 countries (ISO,
1998). Such use of the term correlates with its prevalent meaning of “belonging
to, or being a characteristic of, a group or class”, and its synonym “universal”,
found in most dictionaries (e.g. Webster’s, 1973; Drysdale, 1990). Typically, the
group, class, or “genus” referred to is a discipline‐specific management system.
For example, the standards from the ISO 9000 series belong to the quality
management group/class, and can be universally used for quality management.
The same is true for ISO 14000 and environmental management, and so on.
The current needs of industry, however, are propelling the move away from
discipline‐specific systems, towards all‐encompassing or integrated management
systems and related audits (Wilkinson and Dale, 1999; Karapetrovic and Willborn,
1998c). Therefore, we propose to broaden the term “generic” to include a class of
audit that would span across quality, environmental, safety or financial disciplines.
A “generic audit”, and the corresponding guideline, would be universally
applicable to any management system, irrespective of its purpose, boundaries,
location or outputs. An organization could use such audits to examine the
effectiveness and efficiency of a quality management system, to assess the
compliance of an environmental management system with appropriate standards,
or to improve upon existing safety and ergonomic practices. It could also apply a
generic audit if only one formal management system (say the one for quality) is in
place, or if separate systems exist, or even in the case that the organization is
operating an integrated management system for quality, environmental, safety,
ergonomic, maintenance, financial and other purposes. Generic audits would
provide a consistent, systematic, independent and objective service aimed at
continuous improvement, to the various levels of the hierarchy, from top
management to frontline personnel. In other words, this kind of audit would
extend over many business dimensions and be discipline‐, location‐,
organizational size‐, product/service/process type‐, hierarchical level‐ and

industry‐generic.
Inherent in its generic character is some level of harmonization and possible

integration of existing discipline‐specific audits. This would involve the adoption
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of identical or at least compatible characteristics of well‐established quality,
environmental and financial auditing guidelines, but also some blending or
alignment of their dissimilar attributes. Willborn’s (1982; 1993) work on the
compilation and comparison of quality and financial auditing guidelines provides
a source of defining such characteristics. Naturally, a generic audit would have to
be flexible enough to accommodate diverse functional objectives, and yet sound
enough to ensure consistency of the application and achievement of the
common audit policy of an organization. So, how can we systematically
accomplish these antagonistic goals without losing the important benefits of the
generic audit? As commonly is the case, half of the answer lies in the question, or
to be more precise, in one of its parts: “systematically”.
Systems approach in auditing

The main purpose of a generic audit is to respond to the users’ needs for a
practical, clear and consistent introduction to the auditing of management
systems. This can best be achieved by viewing and presenting all auditing
decisions and activities directly in relation to the stated objectives. Once we know
the purpose and objective (i.e. “Why do we want an audit?”), the audit can be
planned (“How do we do what we want to do?”), resources are determined and
provided (“What do we need to do it?”), auditing processes are performed
(“Where, when, how and who will do it?”), and results are communicated and
reviewed (“How do we know that we have done what we wanted?”). Namely, we
apply the logical systems approach, where a “system” is conceptualized as a set of
interrelated processes and resources for achieving a common objective
(Karapetrovic and Willborn, 1998a). The above‐mentioned sequence of activities
flows irrespective of any particular auditing discipline, and is in fact common to
all management activities. Karapetrovic and Willborn (1998b) illustrate this
“generic” virtue of the systems approach with respect to auditing using an
example of the current quality (ISO 10011, 1990) and environmental (ISO
14010/11/12, 1996) auditing guidelines.
The main advantage of the systems approach in generic auditing is that it focuses
on the examination of interdependencies of management system elements within
a particular discipline, but also across quality, environmental, financial and other
disciplines. This provides for a better understanding of the overall business
system, and alignment of underlying management systems toward the global
organizational goal. According to Goldratt (1990), the pioneer of the theory of

constraints and synchronous manufacturing, making more money now and in the
future is such a goal for most businesses. In essence very similar and compatible
with the systems approach to management, Goldratt’s theories demonstrate an
all‐encompassing management philosophy that includes a consistent set of
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principles, procedures, and techniques in which every action is evaluated in terms
of the common global goal of the organization (Srikanth and Cavallaro, 1987). All
organizational elements, meaning the various processes, resources and
objectives, should be inter‐linked and geared to achieve this common goal. While
they were initially designed for manufacturing problems in inventory control and
scheduling of operations, Goldratt’s principles can be applied in other areas, such
as auditing.
The systems approach in auditing allows for the optimization of quality,

environmental, health and safety, ergonomic and financial audits towards a single
global objective (say to continuously measure and improve organizational
performance), rather than optimizing separate audits with respect to unrelated
objectives. The latter approach, dubbed “mechanistic” by Hirzel (1998), inevitably
leads to sub‐optimization and waste. Explaining why the systems concept is more
appropriate in today’s business environment, Hirzel (1998) states:
The mechanistic approach emphasizes the reduction of responsibilities and

tasks into separate manageable elements. But more can be learned about an
organization by examining the whole and its relationships and patterns.
Because all audit elements (processes, resources and individual audit objectives)
are subjected to the achievement of the global auditing goal, the audit system
becomes inherently dynamic and adaptive to the changes or disturbances in the
system environment. For a further discussion on the dynamic properties of
auditing, see Peters (1998) and Willborn (1990).
For example, if a company’s market share has decreased, a series of generic

audits covering different functions can be immediately scheduled and conducted
to discover the causes of poor performance. The focus is placed on the most
important causes that bear the largest risks if not corrected and prevented. It
could be found, for instance, that a combination of a steadily decreasing quality
and reliability of a particular product, paired with its poor environmental
performance and an increased cost of the product distributors’ services, is the
main source of the share decline. Without the systems approach in auditing, all
that could be affirmed are separate quality, environmental and financial problems,
h i di id ll h d l li ibl d
that individually may have caused only negligible damage.
Therefore, a generic audit is conceived as a single system, a set of interdependent

quality, environmental, financial and other discipline‐specific audit processes, that
function harmoniously and using various human, material, information and
infrastructure resources, are aimed at achieving a common organizational audit
objective. Depending on the required focus and individual organizational
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objectives, this flexible system can be leveraged to attain specific quality,
environmental, safety, etc. goals. For example, as illustrated on top of Figure 1, if
we want to improve environmental (or quality) performance, our generic audit
will become an environmental (or quality) audit system. The generic audit system
is also a subsystem of the generic business system (Figure 1: bottom). Discipline‐
specific audits are, therefore, subsystems of quality, environmental and other
management systems.
Viewing audits in this manner certainly stands to reason. Successful organizations,

smaller ones in particular, manage their business in an integrative fashion.
Namely, they simply design and implement whatever processes and resources
necessary to achieve the objectives of growth, improvement and profitability.
Therefore, they only have a single, generic business system, and separate quality,
environmental, financial, human resources management systems are just
manifestations of this generic system with respect to different product or service
dimensions. The quality dimension, for instance, relates to the ability of the
product or service to meet customer requirements, and in order to ensure this
performance, adequate processes and resources are combined into a quality
management system. However, the product or service is unique, and we can not
physically separate its quality from, for example, environmental characteristics.
The same is true for management systems. Under the systems view, audits are
recognized conceptually and practically, as directly connected to the respective
management systems. As an independent subsystem, the generic audit serves as
an effective and important aid in the management of a generic business system.
For a more detailed description of the linkages between audits and respective
management systems, the interested reader is referred to Karapetrovic and
Willborn (1998a‐d).
To ensure proper interdependencies of discipline‐specific audits, as well as an

adequate alignment of audit objectives and processes, the following two sections
represent a generic audit definition, principles and practices, as well as an outline
of a generic audit guideline. The audit principles introduce the systems view by
first outlining basic audit purposes and objectives, followed by adequate audit
planning and resource deployment, reliable processes for evaluating relevant
id d ti bi dj d t Fi ll th dit ’ t
evidence, and reporting unbiased judgments. Finally, the auditor’s competence as
the human agent in such an audit system is seen as the most important
prerequisite for achieving audit objectives. Here again the systems view applies, as
is explained in the generic audit guideline.
Auditing definitions, principles and practices
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Section: Choose
Definitions
The understanding of what auditing is and what it is not differs with the areas and
types of application. In the auditing of management systems, for instance, the ISO
10011 (1990) guideline for quality audit specifies that the auditor evaluates the
suitability and effectiveness of the system implemented by a company. The similar
guideline for auditing environmental management systems, namely ISO 14011
(1996), considers that such a general judgement of the system effectiveness is not
the responsibility of the auditor, who is only to verify compliance with audit
criteria. Still, both these international audit guidelines have many similar, if not
identical, features and requirements (Karapetrovic and Willborn, 1998b). This is
hardly surprising, considering the shared history and close ties between the
quality and environmental technical committees (TC 176 and TC 207 respectively)
that drafted the guidelines.
In order to be able to conceptualize a generic audit, we have to come to some

operational definition of the audit. Table I presents a selection of available audit
definitions from a total of ten dictionaries, guidelines and standards, together with
brief comments on the acceptability and effectiveness of each definition for
generic audit purposes. The selection indicates a diverse understanding of
auditing in various disciplines, including quality, environment, software
development and external financial accounting. Nevertheless, the essence of
auditing as an independent, listening, examining, evaluating, and reporting
activity, as well as a management information source, is also emphasized. On
examination of these concepts, the following definition of a generic audit is
suggested: “Independent and documented system for obtaining and verifying
audit evidence, objectively examining the evidence against audit criteria, and
reporting the audit findings, while taking into account audit risk and materiality”.
This definition is based on the current developments at the international level,
namely the ISO 19011 audit guideline. It is relatively brief, applicable to all
management systems, and may include product and process audits, if required. It
may also embody examinations of suitability and effectiveness of a management
system to meet objectives, but can also be reduced to a simple evaluation of
compliance. Another advantage of this definition is its agreement with the
systems approach (an audit is primarily a system, especially a management
support system, rather than a management tool). To illustrate interrelationships

among other concepts related to the audit, including the audit system, audit
program, audit processes, resources and policies, a concept diagram is presented
in Figure 2.
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Principles
Apart from the understanding of the term “audit”, in the century‐old auditing
practice, certain basic commonalities have evolved even as the business
environment has changed. We can refer to these commonalities as “audit
principles”, defined in the words of Schandl (1978) as “a group of guidelines or
recommendations to be followed in auditing practice if we want a good audit, a
correct opinion or judgement.” Historically, the earliest known auditing dates
back to ancient Rome, where an auditor was a public officer who observed
certain transactions and reported them if a misrepresentation occurred (Schandl,
1978). Interestingly though, the ancient accounts of auditing maintained several
fundamental principles that are still common to audits today. For instance,
auditors were independent, i.e. not a party to the proceedings, they were
objective in their observations and they had a duty to report the findings.
Therefore, in spite of the passage of time, the auditing practice in general, and
auditing principles, remain basically unchanged. While the ISO 10011 (1990)
quality audit guideline implies most of these principles, the subsequently
published one for environmental management system lists auditing principles in a
special document (ISO 14010, 1996), that logically precedes the audit process
(ISO 14011, 1996) and auditor qualifications (ISO 14012, 1996). Although the
principles of sound auditing have been widely used and are well established in the
accounting and internal auditing fields, such an explicit listing of audit principles
in environmental management has greatly helped to enhance the understanding
of management system auditing.
Figure 3 (top) lists in a tabular format the fundamental audit principles from three
different sources: accounting, quality and environmental management. It shows
compatibility among the essential rules for guiding auditing activities. For the
purposes of planning, conducting and improving upon generic audits, these
principles could be streamlined on their common basis, and perhaps augmented
with a general principle of continuous improvement. For instance, Arter (1998)
states the following five universal principles of auditing:
1. 1 audits indicate if adequate controls are in place;
2. 2 auditors are competent;

3. 3 audits are proficient, fact‐based, and performed professionally;
4. 4 audits result in information that meets auditee needs and allows

problems to be corrected; and
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5. 5 audit systems are managed for excellence.”
After taking into account the stated principles from different management fields,
a set of principles that could be used for the generic audit is proposed. This set,
arranged according to the systems approach, is presented in Figure 3 (bottom).
The purpose of outlining auditing principles is to guide good auditing practice,

especially in the management system area. While most auditors and their clients
would agree with these principles, detailed practices still vary. One major concern
is that some of the stated principles are still unknown or may be violated in
practice. For instance, proper audit methods, such as statistical sampling
techniques, may not be applied systematically in all audit disciplines. The auditee
or the client may perceive audit results as inconsistent and based on inadequate
data, questionable evidence, or second‐rate judgements. Auditors may be
inadequately trained and possess unverified qualifications and competence. Their
work may be perceived as inconsistent (Stratton, 1995). Although such a faulty
auditing performance appears to be an exception, there is a need for upgrading
and continuous improvement of management systems auditing (Willborn and
Cheng, 1994; Walker, 1998; Stratton, 1995; Druckman, 1997; Stranak and Stratton,
1997). A statement of common audit practices may facilitate such improvement.
Naturally, any such integrative effort would require a relatively broad consensus
of interested parties from different disciplines. Rather than working in parallel on
similar and compatible issues, as was done in the past (see Vinten (1998b) on the
contested territory of internal audit), stakeholders in the auditing issue should sit
together, work out a common ground, and use the inevitable synergy effects to
their advantage. Representatives from various international professional
organizations, including the Institute of Internal Auditors (IIA), International
Federation of Accountants (IFAC), joint quality and environmental auditing
committee under the umbrella of the International Organization for
Standardization (ISO), and other concerned bodies, should certainly be involved.
This joint group could then be given a task to develop a set of generic auditing
guidelines, using the input from all relevant sources (such as existing audit
standards) and disciplines. The ISO format of making decisions by consensus
seems to be useful for this work. Once drafted, these guidelines would be
adopted by all participating bodies as international standards and a permanent
adopted by all participating bodies as international standards, and a permanent
committee would revise and improve them according to the needs and state‐of‐
the‐art developments. The use of the guidelines should be championed by
international and national professional organizations, including for example the
American Society for Quality (ASQ), the Chartered Institute of Public Finance and
Accountancy (CIPFA), and the American Institute of Certified Public Accountants
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(AICPA). Undoubtedly, these common auditing standards should be included in
the body of knowledge required for auditor qualifications, regardless of the
auditing discipline. A more detailed proposal for such guidelines is addressed later
in the paper.
Practices
Perhaps of all the characteristics of discipline‐specific audits, the most common
are the accepted practices of planning, conducting and reporting on the audit.
Audit practices, or the audit process, relate to the flow of activities from the
conception of an individual audit to the evaluation of whether the audit has
achieved set objectives. This is the area that will probably bring the least
contention among experts from different audit disciplines (Karapetrovic and
Willborn, 1998b). Because of their similarity, the harmonization of audit practices
for the purposes of generic auditing should be relatively straightforward, barring
any obstacles of a “political” nature.
A good way to represent a process or a flow of activities is to use a graphical tool,

such as a flowchart or business process mapping. Flowcharts are invaluable tools
of auditors, regardless of the discipline, because they graphically represent all the
information required for the knowledge and evaluation of particular process steps
and decision points. Therefore, the individual audit process can be represented
with a compact flowchart. While the earliest quality management audit standards,
such as the American Q1 (ANSI/ASQC, 1986) and Canadian Q395 (CSA, 1981)
depict the audit practices using flowcharts, the presently valid quality (ISO 10011,
1990) and environmental (ISO 14010/11/12, 1996) audit standards do not.
Unfortunately, the current developments regarding a new quality and
environmental audit guideline at the international level do not point in the
direction of using flowcharts. Nevertheless, we have illustrated the generic audit
process with a flowchart in Figure 4.
The audit process is normally initiated directly by a client. For example, a

company’s top management may want to assess the effectiveness of the overall
management system to achieve set objectives. However, provisions in an audit
program (set of individual audits) or the audit system (set of programs) can also
launch individual audits. For instance, an environmental program may specify that
individual audits are to be conducted every six months, or when a follow‐up on a
previous risk‐based audit is required. Following initiation, audit objectives, scope

and criteria are identified, provisions are made for audit management, and general
timelines and the required extent of resources are identified. Subsequently, the
feasibility of attaining set objectives is evaluated, together with the examination of
the required qualifications and competence of auditors. Although the feasibility
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and existence of the qualifications and competence is likely, it is by no means
guaranteed. For example, an auditor who exclusively has experience in the
manufacturing industry may not feel competent to assess a quality management
system in a university environment or in a non‐profit organization. Or perhaps it is
not possible to achieve all objectives within a set time and with given resources.
This would render a planned audit unfeasible. Another solution, such as the
revision of the audit plan or acquiring another auditor or technical expert, is
required. Following the confirmation of feasibility and competence, the audit is
planned and adequate processes and resources are designed. This includes:
• audit plan preparation;
• working papers design;
• audit risk assessment (evaluating the probability that the audit will result in
an incorrect finding (ISO 14010, 1996));
• preparation of the required auditing methodologies, such as checklists,

discovery/acceptance sampling methods and flowcharts.
Auditors are then allocated to audit teams, and specific audit assignments are
given. Prepared audit methodologies may be tested to ensure compliance with
the audit objectives. The audit is executed in the well‐known sequence of: the
opening meeting – collection and verification of audit evidence – comparison of
audit evidence against audit criteria – summary of audit findings – closing
meeting. Finally, the audit report is prepared, communicated and reviewed, which
concludes the audit process in some disciplines (e.g. environmental auditing). In
quality auditing, the process continues with preventive and corrective actions that
eliminate the causes of poor performance or non‐conformances identified by the
audit (Russell and Regel, 1996).
Now that generic audit definitions, principles and practices have been identified,
one question still remains. Namely, how can this presentation of auditing
fundamentals be strengthened, and partly revived, in the rapidly emerging field of
management systems auditing? As Pyzdek (1999) emphasizes for the quality field,
no one best answer exists for auditing either. Perhaps a request for continual
no one best answer exists for auditing either. Perhaps a request for continual
professional development in discipline‐specific and generic auditing would help.

This would demand of auditors not only to demonstrate their competence in
achieving the planned audit objectives on a continuous basis, but also to
recognize and use the best auditing practice identified across disciplines. Another
possibility is the augmentation of auditing as a “learned and regulated profession”,
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not only in accounting, but also in the quality, environment, safety and other
fields. Much like engineers, medical doctors and accountants, for instance,
auditors may organize their own associations, which would set the qualification,
competence and professional development requirements, and protect the
auditors’ interests regardless of which area in auditing they are working in.
Universities should play a more important role here, by offering upper‐level
undergraduate and graduate courses in generic auditing. Without a doubt, the
road to a full development and implementation of a generic audit will be
treacherous and daunting. In our opinion, however, at least a partial answer to the
above question lies in the development of an internationally accepted and
discipline‐wide generic audit guideline, which would certainly be a step in the
right direction.
Generic audit guideline Section: Choose
Two‐ prong approach

All management system standards of the International Organization for
Standardization (ISO) are more or less generic with respect to the type of industry
or region where they are applied. This is also true for the associated audit
guidelines. The American National Standard Q1 (ANSI/ASQC, 1986) was even
called “Generic guidelines for auditing quality systems”. However, the auditing
guidelines have still to overcome the discipline‐entrenched barriers, before
becoming truly generic. For instance, while quality management auditors must
assess the quality system’s compliance to audit criteria and the system’s
effectiveness and suitability to meet set objectives, their environmental
counterparts restrict their evaluation to compliance with relevant criteria only.
This represented an area of much contention in the development of new quality
and environmental auditing guidelines, dubbed “ISO 19011”. Due to increased
pressures from industry and other interested parties, ISO has mandated the
appropriate quality and environmental management subcommittees (TC176/SC3
and TC207/SC2 respectively) to initiate joint work on a single guideline for
auditing quality and environmental management systems. This work is currently
under way, with the release of the international standard expected in year 2001.
Current revisions of quality and environmental auditing guidelines point in the

direction of a harmonized, if not even integrated, audit standards. Harmonization
relates to the effort of aligning the structure and content of the guidelines, which
would remain separate documents, but with a significantly increased
compatibility. On the other hand, integration would involve a complete
amalgamation of guidelines into a single document. Nevertheless, revising
international standards is a complex task. The ongoing work, which started
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several years ago, has yet to produce a final draft. Part of the difficulties
encountered rest in the lack of conceptualization of auditing fundamentals.
Auditors, managers of audit systems and programs, and clients must be equipped
with practical concepts that will strengthen and simplify understanding and
application of auditing. A mere listing of auditing principles, even in connection
with the subsequent outlining of audit processes and auditor qualifications,
appears to be insufficient for such an understanding to occur. The current
revision of ISO audit guidelines will hopefully arrive at an internationally
acceptable integrated audit guideline. This should then facilitate joint or
integrated audits of management systems in a company, since managers are
particularly interested in greater cost‐effectiveness of this type of auditing.
However, we recommend a slightly different approach to provide for a sound

foundation for generic auditing. Let us refer to it as a “two‐prong approach”,
where the first prong involves the ongoing development of an integrated quality
and environmental audit standard (ISO 19011) under the ISO auspices, and the
second prong augments the first one by originating a “generic audit guideline”.
The prongs are simultaneous and supplement each other. The second prong is
similar, but not identical with the widely preferred alternative of a “core plus
satellites” standard in the current ISO revision efforts (Figure 5). The core is to
include all common elements of the auditing policy, processes and resources,
regardless of the type of management system and the specific field of auditing.
The satellites would have an identical format (in other words they would be
aligned by the “gravitational pull” of the core), and address specific issues in each
auditing discipline. Currently, only two satellites are planned, namely quality and
environmental audit. In the future, other disciplines could be added, assuming
that the core of the standard would not change with the addition. And this is
where the problem lies. Such a separation of the “core” from the rest of the
auditing standard, even if this is a “strong core”, would still not sufficiently
enhance proper understanding and application of the basic audit principles and
their underlying systems concept. With or without the “core”, audit principles and
practices would still remain basically unchanged. Therefore, we propose a
separate generic audit guideline, which would outline an audit as a generic
system, and a linked subsystem of the generic management system (Figure 1).
This guideline would be generic in itself, meaning that it would not have special
“satellites”, but rather address common (generic) principles and processes of

auditing, regardless of the discipline, industry or region of application. It would
address the “best auditing practice” (Russell, 1997), providing the fundamentals of
the current cutting edge knowledge in auditing. Inherent in this characteristic is
the need for constant benchmarking and change in order to be able to express
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what “the best in auditing” means at any particular time. Developing generic audit
guidelines along both prongs should provide a more solid foundation of modern
management system auditing.
Format and content

The proposed generic audit guideline should augment current or future audit
standards that are more system or discipline‐specific. This would allow the user of
such documents to review the basic principles of generic auditing and the
fundamental features of the audit process, including audit quality assurance,
before getting into the specifics of, say, quality or environmental auditing. This
structure is similar to the current ISO 14010/11/12 series of environmental
auditing standards. The systems approach, however, should achieve significant
improvements for the user and the generic auditing profession. The ISO format
for such a document will be applied. The user is first introduced to the purpose,
scope, normative references, and definitions applicable to the guideline (Figure 6).
The content of most of these sections has been discussed earlier in the paper.
The main body of the generic audit guideline would contain the following three
parts:
1. 1 general principles for auditing management systems;
2. 2 systems approach to generic auditing;
3. 3 quality assurance of generic audits.
The first part would list the fundamental principles of generic auditing, an
example of which has been provided in the above discussion on auditing
principles. It would also provide some guidance on the implementation of these
principles. The second part conceptualizes an audit as a system, illustrates the
basic features of the generic audit system model, and discusses the management
of different levels of audits, including individual generic audits, audit programs,
and finally the audit management system. Similar to the ISO 10011 (1990) quality
audit standard, sections on audit management of the generic guideline would
address such issues as determining the organizational structure, procedures,
authority and responsibility for the audit system, as well as the measurement and
i f di ffi i d ff i Th
improvement of audit system efficiency and effectiveness. Three separate
subsections of the second part of the guideline would illustrate common audit
policy and objectives, audit processes (in the flowchart form, as presented in
Figure 4), and audit resources, including auditors, information (audit evidence,
criteria, findings and conclusions), methods (sampling, flowcharting, checklisting,
computer‐aided auditing) and infrastructure.
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Finally, the third part would address quality assurance of generic audits, including
the establishment of specific quality assurance systems for auditing activities,
reliability and maintainability of generic audits, and, probably the most important
issue, qualifications and competence of auditors as the human resource element
of the audit system. Qualifications refer to the aggregation of auditor’s education,
training and experience, which makes the auditor eligible to conduct audits.
However, competence is a broader concept that involves a demonstrated and
recognized ability to consistently achieve audit objectives and assure the client
and auditee of the quality of auditing services. The guideline for generic audits
would list the principles and methods for the evaluation of competence (for
instance the application of relevant audit methodology), methods for
demonstration and recognition of competence, as well as the principles of
continuous professional development and improvement. Such quality assurance
should provide good confidence to the client and the auditee alike that the
generic audit performance is satisfactory.
Conclusions Section: Choose
Ongoing audits of management systems must become more consistent, effective

and generic across auditing disciplines. The respective auditing standards and
guidelines should follow the same path. These important objectives can best be
achieved if the proposed and briefly explained systems approach is applied.
Particular attention should be paid to the sound conceptualization of a generic
audit, as well as its principles and practices. In this paper, the generic audit of
management systems, spanning quality, environmental, safety, ergonomic and
other disciplines was illustrated using the systems approach. Existing audit
definitions were compared, and a generic audit definition was adapted.
Subsequently, audit principles from the quality, environmental and accounting
disciplines were compiled, and a set of rules for a generic audit was illustrated.
Common audit practices were also depicted, followed by an outline of a generic
audit guideline. This guideline should act as an intermediary aid for management
and auditors, as it links management systems with respective audits. This would
not counteract the ongoing revisions of respective international auditing
standards, as it aims at the same objective and user needs. Further development
and implementation of such a document requires some further research. The key
to success is the open mind of a practitioner.
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Table I Compilation of audit definitions
Figure 1 Generic audit system
Figure 2 Audit concept diagram
Figure 3 Audit principles – comparison and generic audit fundamentals
Figure 4 Generic audit practice
Figure 5 “Core + satellites” auditing standard structure
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Figure 6 Content of a generic audit guideline
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11/4/2019 Generic audit of management systems: fundamentals | Managerial Auditing Journal | Vol 15, No 6

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Generic audit of management systems: Con la tecnología de Traductor de

Abstract: As competition in the global economy grows, management

arrangements, seem to be following the same path. This

financial, safety, maintenance and other auditing disciplines.

with the proposed two‐prong approach to the development

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Citation: Stanislav Karapetrovic, Walter Willborn, (2000) "Generic audit

Article Agency Theory and the

relevant criteria of business performance. A qualified and competent auditor can

In this paper, we examine the fundamentals of management system auditing,

Audit: the need for a solution Section: Choose

examination of their tax returns by the governmental revenue services. If one

Pressing the issue of audit harmonization and integration is the related

• duplication of efforts across different audit programs;

• inconsistencies in applying separate audit guidelines and procedures;

• disagreements among audit teams on common or related issues;

• unnecessary multiple interruptions of auditee departments;

• lack of a unique and coordinated audit policy;

• difficult communication of contrasting audit results;

• missed synergy benefits (system is better than a sum of its parts);

• restrained sharing of resources and expertise of auditors;

• difficulties in internal auditing of integrated management systems.

In attempting to present this solution, we proceed with a discussion on the

Generic audit: the systems approach Section: Choose

extend over many business dimensions and be discipline‐, location‐,

organizational size‐, product/service/process type‐, hierarchical level‐ and

Inherent in its generic character is some level of harmonization and possible

Systems approach in auditing

system, and alignment of underlying management systems toward the global

organizational goal. According to Goldratt (1990), the pioneer of the theory of

The systems approach in auditing allows for the optimization of quality,

The mechanistic approach emphasizes the reduction of responsibilities and

For example, if a company’s market share has decreased, a series of generic

Therefore, a generic audit is conceived as a single system, a set of interdependent

Viewing audits in this manner certainly stands to reason. Successful organizations,

To ensure proper interdependencies of discipline‐specific audits, as well as an

Auditing definitions, principles and practices

In order to be able to conceptualize a generic audit, we have to come to some

systems approach (an audit is primarily a system, especially a management

support system, rather than a management tool). To illustrate interrelationships

1. 1 audits indicate if adequate controls are in place;

2. 2 auditors are competent;

3. 3 audits are proficient, fact‐based, and performed professionally;

4. 4 audits result in information that meets auditee needs and allows

The purpose of outlining auditing principles is to guide good auditing practice,

A good way to represent a process or a flow of activities is to use a graphical tool,

The audit process is normally initiated directly by a client. For example, a

individual audits are to be conducted every six months, or when a follow‐up on a

previous risk‐based audit is required. Following initiation, audit objectives, scope

• audit plan preparation;

• working papers design;

• preparation of the required auditing methodologies, such as checklists,

professional development in discipline‐specific and generic auditing would help.

Generic audit guideline Section: Choose

Two‐ prong approach

Current revisions of quality and environmental auditing guidelines point in the

direction of a harmonized, if not even integrated, audit standards. Harmonization

However, we recommend a slightly different approach to provide for a sound

“satellites”, but rather address common (generic) principles and processes of

Format and content