Internal Audit

Audit
Definition
A systematic, independent and documented
process for obtaining audit evidence and
evaluating it objectively to determine the
extent to which audit criteria are fulfilled
 Terms
• Audit Team – Team Members

• Auditor – Competent to conduct audits

• Lead Auditor – Team Leader

• Auditee – Company Audited

• Audit Plan – Prepared by Team Leader

• Audit Programme

• ISO 17025 – Audit Standard

 Reasons for Audits
• To determine conformity to requirements

• To determine effectiveness of the system

• For improvement of the system

• To meet regulatory requirements

• To meet contract requirements

• To gain registration for marketing and customer

assurance purposes
 Audit Types
• 1st Party – Internal audits of business system

• 2nd Party - Supplier Audits

• 3rd Party - Independent or Certification

Audits
 1st Party Audits
• Auditors – Own Staff

• Beneficiaries – Audi tees / our company

• Style – Can be relaxed and friendly

• Planning – Less demanding as systems and locations

already known

• Depth – Areas audited in detail

• Follow up – fairly simple – own company

 Process of Audit
• Initiating the Audit

• Information gathering

• Documentation Review

• Preparation for audit

• The on site implementation Audit

• Audit Reports and Records

• Corrective Action

• Follow up activities
Process Auditing
 Auditor Selection
• Auditors shall be selected with regards to their
knowledge and experience and availability

• They shall also be selected on their ability to

interact with the other members of the team and
the auditees

• Technical experts and translators may be required

to assist the auditors

• Balance costs with needs of the audit

 Auditor Qualities
• Good listener • Observant
• Note taker • Logical
• Communicator • Polite
• Fair • Assertive
• Knowledgeable • Independent
• Systematic • Confident
• Patient • Diplomatic
• Punctual • Persistent
 Undesirable

• Easily lead • Unprepared

• Unsure • Demanding
• Aggressive • Unpunctual
• Careless • Inconsistent
• Opinionated • Poor record keeper
 On Site Audit Stages
• Opening Meeting

• Examination and evaluation

• Team Meeting

• Agreement of results

• Closing Meeting

• Reporting

• Recommendation

• Follow up
 Opening Meeting (Rules & Norms)

• Lead Auditor Chairs Meeting

• Introduce both sides

• Scope of audit is discussed

• Time wasting is avoided

• Keep it short & relaxed

 Opening Meeting Agenda
• Introductions

• Record attendees

• Agree scope & objectives

• Confirm the audit plan

• Method of conduct of audit

• Confirm auditee co-operation

• End of Day briefings

• Promote auditees participation in audits

 Process Control Map

Men

OUTPUTS
Materials
INPUTS

Methods Process

Machines
Environment
 Methods Auditing
Horizontal Audit Trails

• Following the horizontal path we follow the steps of the

process from start to finish

Vertical Audit Trails

• For the vertical path we must look at the activities of
managers, supervisors, operatives, clerks and assistants up
or down the activity or process.
Audit Techniques

Ask Observe

Audit Diamond

Check
Record

A-R-C-O
 Question Style
• Open – What, Where, Why, When, How, Who

• Closed – Used to confirm the facts

 Cultural Differences

• Auditors should be aware of the needs of delegates

associated with cultures and religions

• At certain times of the day prayers may be taken.

This should be planned

• Some cultures do not like to say no

• Smiles are welcomed everywhere

Reporting the Audit Findings
and Follow up
 Auditors Team Meeting

• Lead Auditor collects and discusses all the

nonconformities to be raised and combines items
if similar examples of the same problem checking
evidence

• Decides whether major or minor

• Checks on conformity and good points

• Allocates writing of NCR’s

 Good Practice Statement
Example 2

1) There were no licenses or records of training for

the forklift truck drivers in the stores area nor in
personnel

2) There were several boxes of components T45

and W37 damaged by forklift truck forks

3) There was no review of competence needs for

forklift truck drivers
 Nonconformity

• The non fulfillment of a requirement

 MAJOR NONCONFORMITY

• The absence or total breakdown of a system

to meet a requirement of the standard.

• A number of minor nonconformities against

one requirement can represent a total
breakdown of the system and thus be
considered a major nonconformity
 Minor Nonconformities

• May arise when there is a defined system

and arrangements which generally satisfy
agreed requirements and the organization
being audited is able to demonstrate an
acceptable level of implementation overall,
but there are minor discrepancies or lapses
in discipline
 Observations
• Audit and surveillance reports may contain
“Observations” which relate to existing
conditions which, in the Auditor’s
judgment, warrants clarification or
investigation so as to improve the overall
status and effectiveness of the quality
system

• Note – may constitute consultancy

 Agreement of NCR’s
• NCR’s are usually agreed with the QMR
following the Auditors Team Meeting and before
the Closing Meeting

• Points can be clarified and checked

• If a genuine error or misunderstanding has been

made withdraw the NCR

• All other NCR’s stand

 Report Contents

• Date, organization and site

• Audit team and auditee’s representative

• Scope and objectives

• Reference documents

• Summary and recommendations as to certification

or approval if appropriate

• Any problems encountered

 Report Contents …contd
• Details of NCR’s

• Judgment on the overall performance and

ability to meet quality objectives

• Recommendations as to actions to be taken

if appropriate

• Report distribution and confidentiality

• Comments from the Closing Meeting

 Follow Up
• Agreed corrective actions are followed up by the Lead
Auditor usually by re-visiting and re-checking the part of
QMS where a deficiency was found

• Some certification bodies do this at the next surveillance

visit
 Audit Records

• Audit Plan, checklists and notes

• Agenda and attendance of opening and closing

meetings

• Audit Report

• Follow up and surveillance reports

Questions
 Define Following Terms
1. Internal Audit

2. Types of Audits (1st party, 2nd party, 3rd party)

3. Major Non-conformity

4. Minor- Non-conformity

5. Write any 7- good characteristics of auditor

6. Write any 5- bad characteristics of auditor

7. Agenda of Opening meeting