PROCEDURE MANUAL

Title: Revision Number: Issue Date: Section:

0 OCT 2011 10.0
INTERNAL AUDITS Prepared By: Approved By: Document No.
OM MD PM-02-10

SECTION 10.0 - INTERNAL AUDITS

1.0 PURPOSE

To verify that all Safety and Pollution Prevention activities are performed in accordance with
approved procedures (SMS) and to facilitate verification of system effectiveness and modifications.
It provides a basis for improvement of the Safety Management System.

2.0 SCOPE

Internal Audits covers all activities related to safety and environmental protections on board the
vessels and it encompasses all departments involved with the SMS. All functions or departments of
the Company and the vessels are to be audited once annually.

3.0 DEFINATIONS

a) Audit: A systematic and independent examination to determine whether Safety and Pollution
Prevention activities and related results comply with planned arrangements and whether these
arrangements are implemented effectively and are suitable to achieve objectives.

b) Major Non-conformance (Major NC):

i) An element of the Code not addressed.

ii) An activity which is in direct contravention of the Code, Rules & Regulations
iii) An activity that is in direct contravention of a procedure and that has consequential effect
on Safety and Pollution Prevention.

c) Non-conformance (NC): An isolated incident of non-conformity with a system or procedural

requirements which has no direct consequential effect on the Safety Management System,
relevant Rules & Regulations, Codes and guidelines.

d) Observation (OBS): Comments on the system with a view to improvements.

e) Annual/Once A Year: Effectively within the period of 12 months.

f) Independent Internal Auditors: A trained personnel conducting internal audits who are
independent of the areas or functions being audited.

K E N C A N A N A U T I L U S S D N B H D (8 8 2 4 5 9 - A)
Level 6, Menara SapuraKencana Petroleum, Solaris Dutamas, Jalan Dutamas 1, 50480 Kuala Lumpur, Malaysia.
T +603 6209 8000, F +603 6209 3859, www.sapurakencana.com
 PROCEDURE MANUAL
Title: Revision Number: Issue Date: Section:
0 OCT 2011 10.0
INTERNAL AUDITS Prepared By: Approved By: Document No.
OM MD PM-02-10

4.0 RESPONSIBILITIES

4.1 a) The Company shall establish and maintain a program of documented procedures
for conducting internal management system audits as at planned interval in
order to determine and verify whether or not:

- activities conform to the planned arrangements of the management

system, and the requirement of this guide;
- the management system is being properly implemented, maintained
and is effective.

b) Internal Audit shall be scheduled to cover all pertinent areas of the management
system on ashore and onboard its vessel every 12 months or less. The frequency and
degree to which each area is audited shall be based on the importance of the activities
conducted in meeting policy objective, and the result of previous audits.

4.2 The MD is to ensure that sufficient resources are available for the DPA to carry out the
audits.

4.3 Auditees (masters and chief engineers) are responsible for evaluating audit results and
recommend/propose dispositions for non-conformities.

4.4 DPA are to :

a) Ensure that NC issued is properly and satisfactorily disposed.

b) Investigate and analyse the NC and decide whether Corrective Actions are required to
prevent recurrence.

5.0 AUDITING PROCEDURES

5.1 a) Office Audit

i) The DPA will inform auditees and auditors of the audit by transmitting
Memorandum one week before hand.

b) Vessel Audit
i) DPA will inform masters and chief engineers by e-mail one week in advance of the
audit.
ii) Masters to revert confirmation to DPA immediately if they are able or otherwise on
the schedules.
iii) DPA will assign auditor(s) for the audit.

5.2 The Audit

a) On starting of an audit, the auditor shall conduct an Opening Meeting. The purpose of the
Opening Meeting is to:

 confirm briefly the purpose and scope of audit

K E N C A N A N A U T I L U S S D N B H D (8 8 2 4 5 9 - A)
Level 6, Menara SapuraKencana Petroleum, Solaris Dutamas, Jalan Dutamas 1, 50480 Kuala Lumpur, Malaysia.
T +603 6209 8000, F +603 6209 3859, www.sapurakencana.com
 PROCEDURE MANUAL
Title: Revision Number: Issue Date: Section:
0 OCT 2011 10.0
INTERNAL AUDITS Prepared By: Approved By: Document No.
OM MD PM-02-10

 review audit scope and agenda

 clarify any ambiguities
 introduce method by which any non-conformance will be addressed
 Record attendance in the Attendance Register (Form Folder)
 Agreed time for closing meeting

b) Audit shall be carried out against the Audit Checklist see Form Folder. This checklist could be
expanded, if necessary to determine compliance with specified requirements and/or
determine the effectiveness of the implementation of a system’s element.

c) While carrying out an audit, objective evidence should be collected and examined and details
recorded on the checklists. Essential information, for example, identification of the evidence
examined, specific details of non-conforming or adverse conditions, should also be recorded.

d) Auditors must be specific (precise and details) when recording a non-conformance. It shall be
recorded against any of the SMS procedures or element of the Code.

e) Upon completion of the audit, and before the Closing Meeting, the auditor should evaluate
the evidence generated during the audit. NC to be issued to the auditees/masters if non-
conformance are found and recorded in the Non-Conformity Report form.

f) Should the NC are unchallenged after the Closing Meeting, it will remain open until disposed,
investigated and analysed.

g) For shipboard audit, auditors to submit immediately the audit reports and Non-Conformity
Report form to DPA for distribution in the office. He is to ensure that descriptions of
disposition are duly entered.

5.3 Closing of NC

a) Auditees/masters/chief engineers must decide dispositions.

b) For shipboard audits, DPA to monitor and ensure that NC are properly disposed.

c) Once disposition had been completed, the master shall inform the DPA via telex or e-mail.
Should the disposition is unsuccessful, DPA to advise master further on tasks that are
required.

d) Dept Head will investigate and analyse to decide whether Corrective Actions are required to
prevent recurrences.

e) During the investigation, the responsible DPA shall consider all potential causes. The results
of the investigation will be recorded in the Non-conformity Report form or attaching an
Investigation Report.

f) Once the root cause is detected, the responsible DPA will proposed corrective actions and it
may results in the following:

K E N C A N A N A U T I L U S S D N B H D (8 8 2 4 5 9 - A)
Level 6, Menara SapuraKencana Petroleum, Solaris Dutamas, Jalan Dutamas 1, 50480 Kuala Lumpur, Malaysia.
T +603 6209 8000, F +603 6209 3859, www.sapurakencana.com
 PROCEDURE MANUAL
Title: Revision Number: Issue Date: Section:
0 OCT 2011 10.0
INTERNAL AUDITS Prepared By: Approved By: Document No.
OM MD PM-02-10

 changes in documented procedures

 training needs of personnel
 notifying others
 modifications and retrofitting of equipment
 others

g) The Dept. Head will raise the Corrective Action Request (CAR) with the proposed corrective
action(s) together with an investigation report.

h) If Corrective Action is not required, the DPA shall close out the NC.

i) Copies of these reports must be returned to DPA for filing and distribution.

j) If Corrective Action is required, Document No. PM-02-7 - Corrective Action shall apply.

6.0 APPENDIX

6.1 VESSEL AUDIT SCHEDULES

7.0 RECORDS (Form Folder)

7.1 ATTENDANCE REGISTER -

7.2 AUDIT CHECKLIST -

7.3 Non-Conformity Report - Refer PM-02-6 Section 6;

K E N C A N A N A U T I L U S S D N B H D (8 8 2 4 5 9 - A)
Level 6, Menara SapuraKencana Petroleum, Solaris Dutamas, Jalan Dutamas 1, 50480 Kuala Lumpur, Malaysia.
T +603 6209 8000, F +603 6209 3859, www.sapurakencana.com