Internal Auditing Skill

INTERNAL AUDIT
Auditing Technique
The Purpose
WHY AUDIT?
Det Norske Veritas AS. All rights reserved
10 June 2009
Slide 2
Management System Audit

Whats done in an audit ?
Effectiveness of an organisations Management System is assessed
10 June 2009
Slide 3
Why Audit
Required by the standard Determine system effectiveness Identify existing nonconformities Highlight areas of strength Point out areas for improvement Indicate requirements for corrective and/or preventive action
10 June 2009
Slide 4
Management System
Management System:
- to establish objectives and to achieve those objectives
Quality Management System:

- to direct and control an organisation with regard to quality
System:
- set of interrelated or interacting elements
10 June 2009
Slide 5
System Audit
The process of assessment has to be
OBJECTIVE
10 June 2009
Slide 6
System Audit
Assessment is a comparison of implemented Quality System with Quality System Standards like ISO 9000 or, implemented OHS system with OHSAS18001
However results depend on Auditor

- hence this training
10 June 2009
Slide 7
What is sought by Auditor

Established Policy and Objectives Developed appropriate systems Necessary documentation of the system Effective implementation of those systems
Since we can never expect absolute perfection the auditor can only assess
The Degree of Compliance
10 June 2009
Slide 8
System Standards
Lay down principles that require interpretation
The auditor must have very strong understanding of principles to be able to assess whether the standard has been
- understood - interpreted - and can demonstrate adequate control
10 June 2009
Slide 9
Questions in an auditors mind

Is the system right and sufficient? Does the organisation do the right things to adequately control quality of products or safety of employees? Does the organisation do things properly all the time? What is the evidence that things are done correctly?
10 June 2009
Slide 10
Nagging questions
What is adequate? When is a thing properly done? How much evidence is required?
Buzz group : You are sent as an auditor to Purchase department and one of the area to be verified is Issue of Purchase orders in time. How would you answer all the above questions ?
10 June 2009
Slide 11
Auditor
Needs to judge whether an organisation has arrived at a sensible and acceptable interpretation of the standard;therefore he must
- study the standard to improve understanding - objective of the system is that performance must be consistently achieved - consider possible consequences of something going wrong due to inadequacy - take account of others opinion
- always use common sense
10 June 2009
Slide 12
Auditor
Looks for:
established policies and objectives developed appropriate systems documentation to ensure adequate control effective implementation of the system
Since we can never expect absolute perfection, the auditor can only assess
THE DEGREE OF COMPLIANCE
10 June 2009
Slide 13
System Audit
Systematic, independent and documented process for obtaining evidence and evaluating it objectively to determine the extent to which the audit criteria is fulfilled
10 June 2009
Slide 14
Types of Audit
Internal Audit External Audit Third Party Audit
10 June 2009
Slide 15
Auditor Competence
Auditors demonstrated capability to apply knowledge and skills based on

- education - experience - training
Qualification process:
- process to demonstrate the ability to fulfil specified requirements (in this case the auditors qualification)
10 June 2009
Slide 16
Audit conventions
Audits create stress. Uncertainty amplifies stress
- Act predictably
10 June 2009
Slide 17
Why conventions?
To reduce stress To have clear methods of audits
10 June 2009
Slide 18
Audit conventions
Start at the top Audit must be planned Examination/Evaluation Reports Follow up action
10 June 2009
Slide 19
Types of audit
Process Product Quality System Compliance Health & Safety Environmental Financial
10 June 2009
Slide 20
10
WHAT IS AN AUDIT?
A health check Key words
Systematic Documented Periodic Objective Verification
10 June 2009
Slide 21
KEY CONCEPTS
Verification Systematic Periodic Objective Documented Evaluate compliance to requirements Carried out in accordance to set protocols Conducted to established schedule Auditors have some independence and findings need evidences Reports are prepared
10 June 2009
Slide 22
11
AUDIT TERMINOLOGY
Audit Cycle:
- period over which ALL parts of organisation are audited
Audit Programme:
- timetable within audit cycle - shows whats audited, when and by whom
10 June 2009
Slide 23
AUDIT TERMINOLOGY
Audit Protocol/Procedure:
- detail of individual audit including: - audit scope - audit frequency - audit methodologies - personnel and experience - documentation required - reporting and distribution
10 June 2009
Slide 24
12
AUDIT SCHEDULING
Unscheduled - usually prompted by:
Significant change in personnel Change in regulations Process change Customer complaint
10 June 2009
Slide 25
AUDIT PROGRAMME
Process to be Audited Procurement Marketing Design Quality Assurance Production

02 02 Q1 Q2
02 Q3
02 Q4
03 Q1
03 Q2
03 Q3
03 Q4
x x x x x
10 June 2009
x x x x x
Slide 26
x x x
13
HOW TO ACHIEVE CONTINUAL IMPROVEMENT
tin con
audit & review
Baseline 2 Time
Slide 27
Baseline 1
Det Norske Veritas AS. All rights reserved 10 June 2009
AUDIT TEAM REQUIREMENTS

Audit team should include experience as:
Team leader Systems auditor Technical specialist If not resourced internally then externally
10 June 2009
audit & review
Baseline 3
audit & review

Slide 28
Actual Performance
ent vem pro im ual
14
AUDIT TEAM REQUIREMENTS

Audit team preferably to have 2 persons:Auditor and Second Man
- Second Man - looking while the auditor is questioning - listening and taking notes - helping share load - corroborating findings - helping draft NCs - assists reporting
10 June 2009
Slide 29
STAGES OF AN AUDIT
Pre-audit activities Audit activities Post audit activities
10 June 2009
Slide 30
15
CONDUCTING AN AUDIT
Pre-Audit
Agree the scope and standards of the audit Establish methods of assessment Select auditors Allocate time frame Review documented MS Research other background information (requirements) Plan the audit (checklists etc.)
10 June 2009
Slide 31
Auditing Approaches
Audit by departments Audit by clauses Auditing by process , risk , aspects
10 June 2009
Slide 32
16
PRE AUDIT PLANNING: CHECKLISTS

ADVANTAGES useful guide to the audit process records evidence record of audit part of report good help for beginners Requirements will be researched Helps pace the audit Acts as a prompt
DISADVANTAGES preparation time needed blinkered view somewhat cumbersome
Checklists are advised they are not mandatory They are an auditors Friend
10 June 2009
Slide 33
AUDIT ACTIVITIES
Opening meeting Review documents Interview Collect evidence/site inspection Closing meeting
10 June 2009
Slide 34
17
AUDIT ACTIVITIES INTERVIEWING SKILLS

Explain why asking a particular question Ask a question in different ways if not understood If auditee becomes stressed - take a break! Speak to supervisor first
10 June 2009
Slide 35
Audit Activity
Auditor refers the checklist, which is a question to himself. He then asks relevant questions to the auditee. Looks for factual evidence - compliance to requirement - effective controls of activities which could affect quality - records to verify if system works - are relevant procedures available with the doers Probing Questioning
10 June 2009
Slide 36
18
Audit Activity
Listening ( test )
- (take notes but get the information first)
Verifying
- (please show me)
Believe a Confession Verify a Claim Looking

- (try to look at everything and you see nothing)
10 June 2009
Slide 37
Verification
Examination of Documents
10 June 2009
Slide 38
19
Verification
Audit where the action is!
- task observation is a powerful method of verification
Observation of Activities and Conditions
10 June 2009
Slide 39
How to Collect Objective Evidence
Review requirements vs. records Observe practice vs. requirements Conduct interviews to verify awareness and understanding Check how is routine work handled Does the system work when something non routine comes up? Are things in control in a crisis?
10 June 2009
Slide 40
20
What?
Why? When?
How?
Where?
Who?
10 June 2009
Slide 41

Closed Question
- Do you know measurement of noise level in ambient air?
Open Question
- How noise level in ambient air is measured ?
10 June 2009
Slide 42
21

DEVELOPING A QUESTION TECHNIQUE
Show me! I dont understand, please explain .... What if ......? Are you saying that ......? Silent approach Puzzled look Good or You have that under control!
10 June 2009
Slide 43

Ensure interviewee: Hears or sees what you tell or show them Understands what they have heard Agrees with what they have heard or seen Takes action Provides feedback
10 June 2009
Slide 44
22
AUDIT ACTIVITIES
Make a note of audit sample - identification of person - identification of documents/records - identification of contract numbers/product/equipment At the end of each department verbally summarise the audit findings - this gives a chance for auditee to correct you - confirms with auditee the findings Auditor must be in control!
10 June 2009
Slide 45
AUDIT ACTIVITIES
If something is wrong: Do not criticise Investigate Do not stop the job Do not undermine supervisor Record specific details Also record compliances!
10 June 2009
Slide 46
23
AUDIT ACTIVITIES
Be objective Persist if a non-conformity exists Dont get annoyed Dont take sides Make your own judgements Plan time effectively Be positive
10 June 2009
Slide 47
AUDIT ACTIVITIES
Exercising Judgement
what is the requirement how to investigate what to investigate who to speak to
10 June 2009
Slide 48
24
INTERVIEWING SKILLS
On completion
- say Thanks!
10 June 2009
Slide 49
POST AUDIT ACTIVITIES

Audit reporting - distinguish between
observations interpretations assessments judgements opinions advice Recommendations Non-conformities
10 June 2009
Slide 50
25
WRITING OF NON-CONFORMITIES
Non-conformities must be based on objective evidence
Requirement
Failure
Evidence
10 June 2009
Slide 51
Audit Observation
CASE STUDY
10 June 2009
Slide 52
26
REMEMBER
The thoroughness and integrity of the internal audit might go some way to doing the certifiers work - external auditors can rely on and therefore use in their own audit many of the internal audit results
10 June 2009
Slide 53
Open forum Discussion
10 June 2009
Slide 54
27
10 June 2009
Slide 55
28

Internal Auditing Skill

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Internal Auditing Skill

Uploaded by

Copyright:

Available Formats

INTERNAL AUDIT

Det Norske Veritas AS. All rights reserved

Management System Audit

Effectiveness of an organisations Management System is assessed

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Quality Management System:

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

However results depend on Auditor

Det Norske Veritas AS. All rights reserved

What is sought by Auditor

The Degree of Compliance

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Questions in an auditors mind

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

- always use common sense

Det Norske Veritas AS. All rights reserved

THE DEGREE OF COMPLIANCE

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Internal Audit External Audit Third Party Audit

Det Norske Veritas AS. All rights reserved

Auditors demonstrated capability to apply knowledge and skills based on

Det Norske Veritas AS. All rights reserved

Audits create stress. Uncertainty amplifies stress

Det Norske Veritas AS. All rights reserved

To reduce stress To have clear methods of audits

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Process to be Audited Procurement Marketing Design Quality Assurance Production

HOW TO ACHIEVE CONTINUAL IMPROVEMENT

audit & review

AUDIT TEAM REQUIREMENTS

Det Norske Veritas AS. All rights reserved

audit & review

audit & review

ent vem pro im ual

AUDIT TEAM REQUIREMENTS

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Audit by departments Audit by clauses Auditing by process , risk , aspects

Det Norske Veritas AS. All rights reserved

PRE AUDIT PLANNING: CHECKLISTS

DISADVANTAGES preparation time needed blinkered view somewhat cumbersome

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

AUDIT ACTIVITIES INTERVIEWING SKILLS

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Believe a Confession Verify a Claim Looking

Det Norske Veritas AS. All rights reserved

Det Norske Veritas AS. All rights reserved

Observation of Activities and Conditions