internal audit

Training Programme Contents

What is Audit ? Purpose of audit. Reasons of audit. Terms in internal audit. Types of audits. Standards deals with audit. Preparing the audits. Auditing techniques Attributes of Auditor
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(22 to 30) (31 to 32)

What is Audit Audit is a word which finds a reference to its use even more than 200 years ago. It mainly referred to as examination of accounts. Audit at all times was mainly considered as verification of financial transaction with reference to vouchers. Auditee often considered this to be a policing activity.
The fear of getting non conformities reported was always persisting. The result was Lack of information flow.
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What is Audit As time changed, the approach to quality took a new dimension. Implementation of quality system further

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enhanced this thought. Audit in a quality system is no longer seen with a different eye. Internal Audit as defined in ISO : 9000 standard A systematic and independent examination to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve objective.
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Purpose of audit quality system elements with specified requirements.

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To determine the conformity or non conformity of

To determine the effectiveness of the implemented quality system in meeting specified quality objective. To provide the audit with an opportunity to improve the quality system. To meet the regulatory requirement.
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Reasons of audit To evaluate a supplier where there is a desire to establish

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contractual relationship. To verify that an organizations own quality management system continues to meet specified requirement and is being implemented. To evaluate an organization own quality management system against standard.

Within the framework of a contractual relationship, to verify

that the suppliers quality system continues to 6meet specified

Terms in audits Auditee Organization / Department / Section being audited. Auditor Person with competence to conduct an audit. Non Conformity The non fulfillment of specified requirement. Observation A statement of fact made during an audit and substantiated by objective evidance.
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INDEX

Terms in audits

contd.

Objective Evidence Data supporting existence of something.. - Statement of facts

Types of audit 1. Internal or First Party Audit Internal audits are those which are carried out by an organization on its own department covered under the quality system by auditors who are independent of the area being audited. Through these audits the management gets the feedback as to how the system is functioning to achieve the objective set in the companies quality policy. 2. External or Second Party Audit External audits are carried out by an organization on premises internal to its won. These could be audit on its own supplier or sub contractor. Like internal audit, the company may use its own resources or hire services of external agency.
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Types of audit

contd

3. Extrinsic or Third party Audit Independent audit of organization to determine how well an organization has implemented quality management system, its own system, product, specifications, for certification, ---- etc. Adequacy Audit Whether the audits are 1st 2nd or 3rd party, it is essential that the system being audited must have level of documentation to allow the audit to take place in the first instance. The first step is, to establish that documented system, in principal meet the requirement of quality system standard against which the company is being audited is called adequacy audit.
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Types of audit

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contd

Compliance Audit It is in fact review of quality system documentation against the applicable standard to check that the system has been designed satisfactorily. The second stage is practical audit called Compliance audit. Vertical Audit If all applicable clauses are audited in department or function. Horizontal Audit During conducting a audit it is common practice to plan dept. by dept. audit with the scope of audit.
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Standard deals with audit ISO / 10011 1 - 1990 IS / 14011 part I 1990

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Preparing the audit The approach to internal audit has to be systematic It should be conducted according to preplanned schedule so that each applicable requirement of the standard is addressed and all areas with an organization are covered within a stupulated period. Within an organization audits are conducted on regular basis to check effectiveness of the quality system.

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Preparing the audit

contd

STEPS Planning and scheduling the audit. Preparation of the audit. Performing the audit. Reporting the audit result. Corrective action and follow up. The need to perform an audit is determined by taking into account specified &/or regulatory requirement.

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Preparing the audit

contd

Planning and scheduling the audit.

The following parameter are considered while deciding the audit planning and schedule. - The audit plan should be approved by M R and communicated to the auditors and auditee. - The audit plan should be designed to be flexible in order to permit effective use of resources. -The audit plan should cover all departments / functions affecting quality. - Identification of the reference documents. - Identification of the individual having significant direct responsibilities regarding the objective & scope. - The date and place where the audit is to be conducted. - The expected time and duration.
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Preparing the audit

contd

Preparing the audit. - Each auditor should be assigned specific quality system
element or functional department to audit. -The document required to facilitate the auditors investigation and documents report results. - Check list for evaluating quality system elements. - Forms for reporting audit observations. - Forms for documenting supporting evidence for conclusion reached by the auditors.

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Preparing the audit

contd

Audit Check list - is a set of questions to be asked and points to be probed during the audit. - It may contain space for writing the observation and findings. Advantage of audit checklist are - It keeps all notes together. - Acts as a guide and gives direction for audit. - Ensure complete coverage of scope. - Helps in time management.

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Preparing the audit Performing the audit.

contd

Evidence should be collected through examination of document and observation of activities and conditions in the area of concern.
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-Clues suggesting non conformities should be noted if they seen significant, even though not covered by check list and should be investigated. - Information gathered through audit should be verified by acquiring the same information from other independent sources, such as physical observation, measurement and records. - All audit observation should be documented.

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Preparing the audit

contd

Reporting the audit result.

- The audit report should be faithfully reflect content of audit. - It should be dated and signed by the auditor and auditee. -It should reflect identification of the reference document against which the audit was conducted ( Quality system standard, Quality Manual, ---- etc. )

TYPES OF NCR
Major Non conformity

Absence of OR total breakdown of system.

- Number of minor nonconformities against one requirement - Any NC that would result in probable ship of NC product. Minor Non conformity - A single observed lapse in complying to QMS
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Preparing the audit

contd

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Corrective action and follow up..

-The auditee is responsible for determining and initiating corrective action needed to correct non conformity or to correct the cause of non conformity. - Corrective action and subsequent follow up audit should be completed within a time period agreed to by the auditor and the auditee in consultation with the M. R.

Note During audit process following meetings are

conducted.

Opening Meeting - For introduction, purpose of audit,

Scope of exclusion, Review of the programme, Guide facility, --- etc.

Closing Meeting - Conclude audit, summary report,

CA / PA Plan, clarification and thanks to organization.
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Auditing Technique There are no specific guidelines in ISO : 9000 series to the way in which the assessment team will carry out the task of critical appraisal of system through interviewing people. The person we wish to interview will range from very senior executives to the people who actually carry out day to day activities in the organisation. We need to be aware of not only of them, who we wish to see , what we are trying to establish and therefore which question is ask, but we need also to be aware of the psychological aspects of this process.

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Auditing Technique

contd.

It is essential that the auditor at all times remain professionals and one of the means by which this can be demonstrated effectively is the way in which difficulties are handed. Though professionalism is difficult to define tangibly but it can be achieved through Correct appearance and approach to the auditee. Total knowledge of the subject. Tactful and diplomatic when difficulties are encountered.
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Auditing Technique

contd

. For an effective interview it will be essential to

extract necessary information in the shortest time and not to distrub the work of the auditee. This could be achieved by interviewing the right people, making the auditee relaxed. A first step towards a successful audit is to arrive on time, introduce yourself with the auditee and spend a short period of time to gain confidence and trust of the people. It is therefore necessary that the right type of question is only asked.
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Auditing Technique contd The most suitable types of questions are those
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which ensure that the persons answering them explains what is happening and the reason for that type of activity. Rudyard Kipling's seven best friends can be used to explain.
WHAT WHERE WHEN WHY HOW WHO SHOW ME
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Auditing Technique
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contd

The last question is used to verify and check if what is said and being done is correct and is being done consistently. The type of question which the auditor should avoid are Posing closed questions like -'Do you do it ?' , 'Is it done like this?' Such questions would usually result in answers like 'Yes' or 'No' and would not tend to provide further details.
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Auditing Technique
.

contd

Posing and answering own questions. In case the questions are like ,
'I hope you do it like _______ ' I presume in case of problem, you take ____ action.

Such questions would feed the answers to auditee's mouth. Not given sufficients time to the auditee to respond. Many times too many questions are asked by the auditor and the auditee is unable to reply them in given time frame.
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Auditing Technique
.

contd

Not asking the relevant questions and spending most of the time in discussing irrelevant matters. It should be remembered that auditors and auditees are both human and have a clear understanding of what they are trying to achieve. Auditors must learn to listen with the mind as well as ears. Some of the do's and don'ts are listed in the next slide.

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Auditing Technique
.

contd

DO'S
Talk to person who does the job. Talk to language of the auditee. Speak clearly. Rephrase the question if not understood. Be relaxed. Be human. Be courteous. Display interest in the auditees and their work. Act professionally. Be on time. Be well prepared. Seek evidence to verify comments made.
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Auditing Technique
.

contd.

INDEX

DON'TS
Don'ts talk down. Don't confuse - ask one question at a time. Don't argue. Don't waist time. Don't get carried away with flattery.

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Attributes of Auditor

An Auditor should be.

Ethical i.e. fair, honest, truthful.

Open minded i. e willing to consider others views. Diplomatic i. e. tactful in dealing with people. Observant i. e. aware of physical surroundings. Versatile i. e. adjusts readily to different solution. Decisive i.e. reaches timely conclusion based on logical reasoning. Self disciplined. Good listener.

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Attributes of Auditor

INDEX

An Auditor should not be.

Argumentative. Impatient. Uncommunicative. Undisciplined. Wants to be liked by all. Accept things at face value. Indecisive.

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How to write NCR

Findings :- At Final Inspection for Panel 110 Dimn. 111.00

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Thanks
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