Overview of Auditing Process

Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Planning and Preparation
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Opening Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Interviews / Collect Information
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Closing Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Reporting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Follow-up and Closure
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Fundamentals - Agenda
Terms
Audit Purpose
Audit Types
Audit Criteria
Roles & Responsibilities
Liability

© QualityGurus.com
Audit
Systematic, independent and
documented process for obtaining audit
evidence and evaluating it objectively to
determine the extent to which the audit
criteria are fulfilled.

© QualityGurus.com
Audit
Systematic,
independent and
documented process
for
obtaining audit evidence2 and
evaluating it objectively
to determine the extent to which the audit
criteria1 are fulfilled.
© QualityGurus.com
Audit Criteria
Set of policies, procedures or
requirements used as a reference
against which the audit evidence is
compared.

© QualityGurus.com
Audit Criteria
Set of policies,
procedures or
requirements
used as a reference
against which the audit evidence2 is
compared.

© QualityGurus.com
Audit Evidence
Records, statement of facts or other
information which are relevant to the audit
criteria and verifiable.

© QualityGurus.com
Audit Evidence
Records,
statement of facts or
other information

which are relevant to the audit criteria1

and
verifiable.

© QualityGurus.com
System, Product and Process Audits
System

Process

Product

© QualityGurus.com
Product Audits

Assessment of “fitness for use”

Products meets the design

requirements

© QualityGurus.com
Process Audits
One specific process, activity or
function

To compare the actual process with the

documented requirements of the
process.

© QualityGurus.com
System Audits

Comprehensive audit of multiple

processes

Includes the interaction between

processes

© QualityGurus.com
System, Product and Process Audits
System

Process

Product

© QualityGurus.com
First, Second and Third Party Audits
First • Internal
Party
Second • By Client
Party
Third • By a third party
Party appointed by client © QualityGurus.com
First Party Audits
Internal audits

Performed within an organization

Auditors have no vested interest in the

area being audited

© QualityGurus.com
Second Party Audits

Performed by Customers on suppliers

Before or after awarding a contract

© QualityGurus.com
Third Party Audits

Performed by an audit organization

independent of the customer-supplier
relationship

Free from any conflict of interest

© QualityGurus.com
First, Second and Third Party Audits
First
Party •Internal
Second
Party •External
Third
Party •External © QualityGurus.com
Benefits of Internal Audits
Identify risks
Identify opportunities for improvement
Verify products fit for use
Procedures exist and are effective
Remedial actions are taken that are
effective
Find the problems before the customer
does

© QualityGurus.com
Benefits of Internal Audits
Reduce rework, rejections
Avoid lawsuits by meeting legal / regulatory
needs
Reduced cost
Build customer confidence
Maintain market standing and/or
reputation
Increase sales

© QualityGurus.com
Audit Objective, Scope, Criteria
Audit Objectives
what is to be accomplished by the
audit
defined by the audit client.
Audit Scope
extent and boundaries of the audit,
Satisfies the purpose of the audit
Audit Criteria
reference against which conformity is
determined © QualityGurus.com
Audit Objectives
Audit objective should be consistent with
the company objectives.

Audit objectives should be realistic and

achievable

Objective to provide a clear focus for the

audit.

© QualityGurus.com
Audit Objectives
Examples of audit programme objectives
include the following:

to meet requirements for certification to a

management system standard;

to verify conformance with contractual

requirements;

to obtain and maintain confidence in the

capability of a supplier;

to contribute to the improvement of the

management system.
© QualityGurus.com
Audit Scope
Extent and boundaries of an audit

Clearly defining the audit scope is

important in determining the budget,
human resources, and time required for
the audit

Clear scope of the audit helps increase the

efficiency and effectiveness of the audit.
© QualityGurus.com
Audit Criteria

Set of policies, procedures or

requirements used as a reference
against which audit evidences are
compared.

© QualityGurus.com
Audit Criteria
Supplier’s Quality System

Contracts
Purchase orders
Customer specifications

National or international standards

Industry codes and standards
Laws and regulations
© QualityGurus.com
Key Audit Participants

Client

Auditor

Auditee
© QualityGurus.com
Audit Participants
Client – organization or person
requesting an audit.

Auditor - person who conducts an

audit

Auditee – organization or individual

being audited
© QualityGurus.com
Client Responsibilities
Initiates audit
Determines audit purpose and
scope
Provide resources
Receives the audit report
Determine the report distribution
Determines actions
© QualityGurus.com
Auditor Responsibilities
Understand the purpose, scope and
audit criteria.
Plans the audit
Perform the audit
Collect audit evidences
Analyze audit evidences
Reports the audit
Follows up the action on audit
findings © QualityGurus.com
Auditee Responsibilities
Inform the staff
Provide resources (interview room,
communications and clerical
support)
Provide escorts
Show objective evidence
Co-operate
Determine and initiate corrective
actions © QualityGurus.com
Other Audit Participants

Technical Expert

Observer

Guide
© QualityGurus.com
Other Audit Participants
Technical expert - person who provides
specific knowledge or expertise to the
audit team.
Observer – person who accompanies
the audit team but does not audit.
Guide - person appointed by auditee to
assist the audit team.

© QualityGurus.com
Independence
Auditors are independent when they render impartial
and unbiased judgment in the conduct of audit.

Conflict of interest is a situation in which an internal

auditor has a competing professional or personal
interest.

Audit independence is essentially a state of mind.

Internal auditors can not be physically independent
from the organization they are working for, but they
can always stay objective.
© QualityGurus.com
Objectivity
Objectivity is a mental attitude which auditors should
maintain while performing engagements.

The auditor should have an impartial, un-biased

attitude and avoid conflict of interest situations.

It is sometimes described as ‘independence of mind’.

auditors are not to accept fees, gifts, or

entertainment that may create the appearance that
the auditor's objectivity has been impaired.
© QualityGurus.com
Overview of Auditing Process
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Planning and Preparation
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Opening Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Interviews / Collect Information
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Closing Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Reporting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Follow-up and Closure
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Programme
Audits are planned and documented
Formal and systematic
Are never informal

© QualityGurus.com
Audit Programme
An audit programme shall be planned,
taking into consideration
the status of the processes
importance of the processes
areas to be audited,
the results of previous audits

Frequency also depends on Criticality of

product or service

© QualityGurus.com
Audit Resources
The number and composition of the
auditor team depend upon:
Objective, Scope, Depth of audit
Competence of team members
Team work, and ability to interact
effectively with auditee
statutory, regulatory, contractual and
accreditation / certification
requirements,
© QualityGurus.com
Audit Resources
The number and composition of the
auditor team depend upon:
Language / cultural issues
Type of audit (System, Process,
Product)
Specific technical expertise
Location of audit
Cost consideration
Time available
© QualityGurus.com
Notify Auditee
Advance/formal notice to auditee
Gives auditee an opportunity to get
their house in order
Incentive to improve their control
systems
Letter to auditee Quality manager
and top management
Should cover the requirements of
the audit team © QualityGurus.com
Notify Auditee
Contents of audit notification
General audit objective
Names of audit team and team leader
Official contacts of lead auditor
Time and location of entrance.
Method of distribution of final audit
report.

© QualityGurus.com
Notify Auditee
Contents of audit notification
Identification of areas of special
concern
Tentative audit schedule (to be
reconfirmed in the opening meeting)
Documents to be submitted prior to the
audit for review.

© QualityGurus.com
Document Review
Review documents (criteria) related to the
auditee organization
Contract, Specifications,
Quality Manual,
Procedures, Guidelines
Organization Charts
Codes and Regulations etc.
Previous audit reports/programs
© QualityGurus.com
Document Review
Advantages of in-office review
Gain good understanding of the client
Enable the team to prepare relevant
questions to the client during entrance
meeting.
Help the team to understand well the
criteria (what is to be done; by whom
and when).
Saves the audit investigation time
© QualityGurus.com
Identify Potential Risks
Identifying areas for audit emphasis (risk
area). These include:-
Areas identified/documented in Risk
Register.
Area of high possibility of mis-
management
Where there is large volumes of
transactions.
Where management has expressed
concerns.
Where prior audit disclosed major
weakness/deficiencies. © QualityGurus.com
Determining Auditor Competence
Factors to consider:
Size, nature and complexity of organization
to be audited.
Complexity of the management system to
be audited

© QualityGurus.com
Determining Auditor Competence
Personal Behaviour
Auditing Knowledge
Audit principles, procedures and methods
Management system
Technical Knowledge
Contractual requirements
Codes and standards
Discipline / Sector specific

© QualityGurus.com
Personal Behaviour
Ethical Decisive
Open-minded Self-reliant
Diplomatic Acting with fortitude
Perceptive Open to
Versatile improvement
Tenacious Culturally sensitive
Collaborative

© QualityGurus.com
Negative Characteristics
Argumentative Inflexibility
Opinionated Lazy
Over-conclusive Impractical
Aggressive “Know-it-all”
Inconsiderate Indecisive
Inconsistency

© QualityGurus.com
Auditing Knowledge
Plan and organize
Time management
Prioritize and focus on significant issues
Interview, listen, observe and review
documents
Communicate effectively
Understand the risks associated

© QualityGurus.com
Management System Knowledge
Knowledge of Management Systems (e.g.
ISO 9001)

© QualityGurus.com
Technical Knowledge
Discipline/ Sector specific knowledge
Legal requirements related to sector
Codes and standards
Contract / Purchase Order

© QualityGurus.com
Role of Lead Auditor
Balance the strength and weaknesses of
team members
Manage the audit process
Represent the audit team
Lead the audit team
Prepare and complete the audit report

© QualityGurus.com
Auditors Evaluation Criteria
Personal Behaviour
Auditing Knowledge
Technical Knowledge
Education
Work experience
Training
Audit Experience
© QualityGurus.com
Audit Logistics
Time / location of
Arrival
Opening meeting
Interviews
Closing meeting
Facilities for the audit team
Conference room
Internet connection
Personal Protective Equipment (PPE)
© QualityGurus.com
Audit Logistics
Restrictions
Out of bound areas
Use of Camera
Travel
Travel bookings
Hotel
Transport

© QualityGurus.com
Checklists

Checklists
are useful
aides-mémoire.

© QualityGurus.com
Purpose of the Audit Checklist
Help in time management
Helps in note taking
Memory tool
To ensure that all areas have been
covered
Evidence of audit effectiveness
The checklists should be a good servant,
never the master, of the auditor.
© QualityGurus.com
Generic vs Specific Checklists
Generic checklists
Supplement with specific items

Specific Checklists
Prepared for a specific use.

© QualityGurus.com
Checklists
Developed by Lead auditor or auditor
Based on audit purpose and scope
Questions should be open-ended
Should have space to record response
Sent to auditee prior to audit, usually at
the time of notification

© QualityGurus.com
Scoring vs Non-scoring Checklists
Scoring checklists:
Used for comparison purpose
Score may become goal, bias in marking

Non-scoring checklists:
Good for continuous improvement and are
flexible

© QualityGurus.com
Advantages of Checklists
Promotes planning for the audit
Thorough coverage of the scope
Time management during audit
Consistent audit approach
Serves as a memory aid
Objective evidence that audit was
performed
Information base for future audits
© QualityGurus.com
Disadvantages of Checklists
Questionnaires narrow the vision
Questionnaires may obstruct
communication
Too strict following of the checklist may
result in omission of important audit
trails
Generic checklists may not add any
value
© QualityGurus.com
Auditing Strategy
Trace forward
Trace backward
Random selection

© QualityGurus.com
Auditing Strategy
Trace Forward
Examination from beginning to the end
Beneficial to get the whole picture from the start
to finish

Trace Backward
Beginning at the end and working back through
the process
Understanding of end objective is attained right
away
All product records exist
© QualityGurus.com
Auditing Strategy
Random Selection
Alternate method instead of tracing
Advantage:
Where time and personnel are limited
Most frequently used
Use of flowchart to identify important steps in
flow
Flexible and saves time
Disadvantage:
Additional note taking
Difficulty in understanding the process flow
Experienced auditor required © QualityGurus.com
Auditing Strategy
Department Audit (or Vertical audit)
Several system elements are audited in a single
department
Saves times (+)
Judges company on management of one
department (-)
Auditor should be very familiar with the
requirements

© QualityGurus.com
Auditing Strategy
Element Audit method (Horizontal)
To satisfy elements on checklist several
departments audited
Adequacy of the system is easier for auditor to
judge
More time to trace each element

© QualityGurus.com
Opening Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Planning
Select the team
Prepare plan
Prepare working documents
Logistics

© QualityGurus.com
Notify the Auditee
Audit Plan
Timetable
Checklists

© QualityGurus.com
Notify the Audit Team
Dates & duration
Detailed plan
Individual tasks
Results of document review
Any special requirements

© QualityGurus.com
Opening Meetings Participants
Auditee senior management (minimum
Management Rep.)
Quality Manager
Audit guides
All audit team participates
Lead Auditor chairs the meeting

© QualityGurus.com
Opening Meeting Agenda
Safety topic (evacuation, PPE)
Introduce the team
Objective, scope & criteria
Review audit plan and meeting times
Explain about sampling
Confidentiality
Method of reporting (grading)

© QualityGurus.com
Opening Meeting Agenda
Confirm staff aware & available
Confirm resources and facilities
Confirm availability of guides
Reporting on findings
Closing meeting time and location
Questions

© QualityGurus.com
Audit Interview / Data Collection
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Interview / Data Collection
Questioning / Interviewing
Observation / Verification
Document review / verification
Taking Notes
Corroboration
Generate Audit Findings
Prepare Audit Conclusion
© QualityGurus.com
Questioning Technique
Questions should:
Yield the relevant information
Should not suggest answers
Should not contain emotive words

© QualityGurus.com
Questioning Technique
Ask questions in conversational manner
Weave questions into general
conversation

© QualityGurus.com
Questioning Technique
Open questions
Closed questions
Clarifying questions

© QualityGurus.com
Open Questions
What? Why? Where? Who? When?
How?
Advantage: Yield informative answer
Limitation: May lead to conversation get
side-tracked!
One way to avoid diluting:
Show me!

© QualityGurus.com
Closed Questions
Closed questions - answer: Yes/No
Open questions - answer: few words
Intended to yield very specific
information
Disadvantages:
Do not bring much information
If used too often may create
Impression of cross -examination
© QualityGurus.com
Clarifying Questions
Intended to clarify, retrieve full
information and prevent
misunderstanding

Disadvantages:
If used too often may create
impression that you were not listening
Are time-consuming
If you are not prepared to listen in full
don’t ask them © QualityGurus.com
Tips for a Successful Audit
Establish suitable climate
Put auditee at ease
Use proper questioning technique
Use open questions and sparingly
closed questions

© QualityGurus.com
Observations
Keep observing the physical evidence:
Products
Equipment
Instruments
Conditions
Operations

© QualityGurus.com
Observations
What is it used for?
Need it be calibrated?
Was it calibrated?
Is there a record?
What is the reading?
Is the reading within the acceptable
range?

© QualityGurus.com
Observations
Identification?
Status with respect to measurement
and monitoring?
Storage location & conditions?

© QualityGurus.com
Document Review
Quality Manual
Procedures
Work Instructions
Records

© QualityGurus.com
Document Review
Document review to determine the
conformity to the system.

© QualityGurus.com
Document Review
Sample of Records:

No time to check everything

Select representative sample
No set percentage
Representation of actions
Cover relevant period

© QualityGurus.com
Notes Taking
Explain the need to take notes to
auditee
Make your notes:
Comprehensive
Accurate
Precise
Legible

© QualityGurus.com
Notes Taking
Documents:
Title and document number
Revision number
Issue date
Location where seen the document

Part:
Part description
Identification number

© QualityGurus.com
Notes Taking
Person:
Name
Title
Department

© QualityGurus.com
Corroboration
To strengthen with other evidence, to make
more certain.
More important for data/information which
could be questionable/doubtful.
Confirming or verifying using multiple
sources.

© QualityGurus.com
Generate Audit Findings
Evaluate audit evidence against audit
criteria
Audit finding can be conformity or
nonconformity
Nonconformity may be graded
Review with auditee for accuracy of audit
evidence
Review audit findings with audit team at
appropriate stages
© QualityGurus.com
Audit Conclusion
Audit team meets prior to the closing
meeting to:
Review audit findings
Agree on audit conclusions
Prepare recommendations, if specified by
audit plan
Discuss audit follow-up

Achievement of audit objective, coverage

of audit scope, and fulfilment of audit
criteria. © QualityGurus.com
Closing Meeting
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Closing Meeting Participants
Auditee senior management (minimum
Management Rep.)
Quality Manager
Audit guides
All audit team participates
Lead Auditor chairs the meeting

© QualityGurus.com
Closing Meeting Agenda
Safety topic
Explain about sampling
Method of reporting (grading)
Process of handling of audit findings
Presentation of audit findings
Draft report
Recommendations?
Any disagreement
© QualityGurus.com
Audit Report
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Report Responsibility
Product of the Audit

The Lead Auditor is responsible for

content, accuracy and submittal in a
timely fashion

© QualityGurus.com
Audit Report Ethics
Formal Audit report should begin
immediately after the close-out
meeting, while audit details are fresh.

Findings not from the exit meeting or

not included in the draft audit report.

Pressure from management to alter

the report
© QualityGurus.com
Audit Report Timing
Complete as soon as possible
Problems with Formal Report
procrastination
-The longer it is put off, the lesser
interest in pursuing the corrective
actions
-Comes to a backseat because of
more other priorities
-A signal to the auditee management
not important as was initially believed
© QualityGurus.com
What not to be included
Confidential or proprietary
information
Subjective opinions
Recommendation
Minor deficiencies discovered and
corrected during the audit (maintain
only in the working papers future
audits)

© QualityGurus.com
What not to be included
Name of individual employees
Nit-pick (trivial many)
Emotional or argument statements
Items not presented in the draft
report or exit interview

More than six or seven major findings

© QualityGurus.com
Contents
Content of a Standard formal report
format
-Cover sheet
-Main body of the report
-Findings and Observations

© QualityGurus.com
Contents
The Cover Sheet
- Audit reference number
- Date of issue
- Company name
- Location
- Area/function audited

© QualityGurus.com
Contents
The Cover Sheet
- Name of Auditor / Lead Auditor
- Auditees interviewed
- Audit purpose, scope, criteria
- Distribution list
- An executive summary of findings

© QualityGurus.com
Contents
Main Body of the Report
- Strengths or Positive Findings
- Audit findings and evidences
- A statement on the degree to which
the audit criteria have been fulfilled.
- Nonconformities to be addressed.

© QualityGurus.com
Contents per ISO 19011:2011
The audit report should provide a
complete, accurate, concise and clear
record of the audit and should
include or refer to the following:
Audit objective
Audit scope
Audit client
Audit team leader & team members
Date and location of the audit activities
Audit criteria
Audit findings
Audit conclusions © QualityGurus.com
Report Retention
Importance of Retaining

Follow up on continuing Corrective

Action success
Developing future checklists
Starting point for the future audits
Potential litigation purpose

© QualityGurus.com
Report Retention
How long to retain?

As required by the Audit Program, or

Client
Company’s record retention policy

© QualityGurus.com
Follow-up and Closure
Planning and
Preparation

Follow-up Opening
and Closure Meeting

Audit
Reporting
Interviews

Closing
Meeting © QualityGurus.com
Audit Follow-up
Depending upon the audit objective
auditee undertakes
Correction
Corrective Action
Preventive Action
Within agreed timeframe

© QualityGurus.com
Audit Follow-up
Auditee keep audit team informed of
these actions
Completion and effectiveness is verified
Verification may be part of a subsequent
audit.

© QualityGurus.com
Audit Closure
Audit is complete when all planned
activities have been carried out, or
agreed with the audit client.
Audit records to be retained or
destroyed. (as per procedure or
applicable requirements)

© QualityGurus.com