presentation for internal auditor training rev.1.pptx

CONSULTANT AND TRAINING CENTRE SDN BHD (1089456-K)

INTERNAL AUDITOR TRAINING

Table of Content

1. Introduction to Auditing2. Process Approach & Process Auditing3. Managing Audit Programme4. Auditing Activities5. Competency & Responsibilities of Auditor6. Conclusion

1. Introduction to Auditing

What is an audit ?

Systematic, independent and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which audit criteria are fulfilled(ISO19011: 2002 clause 3.1)

an evidence gathering process

Why audit ?

Requirement of ISO 9001:2015 Monitor and measure the management

system Promote continuous improvement of

the management system Promote continuous improvement of the management system

Principle of AuditingPrinciples relating to auditors: Ethical conduct Fair presentation Due professional care

Principles relating to audit: Independence Evidence-based approachNote: reference to ISO 19011:2002 Clause number 4.0

Benefits of Auditing

Verifies conformity to requirements Increases awareness and understanding Provides a measurement of effectiveness of the

management system to top management Reduces risk of management system failure Identifies improvement opportunities Continuous improvement if performed regularly

Type of Audit

First-party (internal audit)

Second-party (external audit)

Third-party (external audit)

Workshop 01

Answers for Workshop 01-Type of Audit

First-party audit

Organizations use first party audits to audit themselves. First party audits are used to confirm or improve the effectiveness

of management systems. They're also used to declare that an organization complies with an ISO standard (this is called a self-declaration). Of course, such a declaration is credible only if first party auditors are genuinely independent and free of bias. If you decide to use first party auditors to make a self-declaration

of compliance, make sure that they aren't auditing their own work.

Second-party auditThey’re usually done by customers or by others on their behalf. However, they can also be done by regulators or any other external party that has a formal interest in an organization.

Answers for Workshop 01-Type of Audit

Third-party auditThey’re performed by independent organizations such as registrars (certification bodies) or regulators.

Answers for Workshop 01-Type of Audit

2. Process Approach & Process Auditing

Process Approach

The process approach emphasize the importance of :

Understanding and meeting requirements Looking at processes in terms of added value Obtaining results of process performance Continual improvement of process

Process Approach

The process approach emphasize the importance of :

Understanding and meeting requirements Looking at processes in terms of added value Obtaining results of process performance Continual improvement of process

PDCA (Plan-Do-Check-Act)

PLAN• What to do?• How to do?

DO• Do what was

planned

CHECK• Did things

happen according to plan?

ACT• How to

improve next time?

Workshop 02

PDCA (Plan-Do-Check-Act)

CUSTO

MER

REQUIREMENTS

SATISFACTION

CUSTO

MER

Management Responsibility

PLAN

ResourceManagement

DO

Product Realization

CHECK

Measurement, Analysis,

Improvement

ACT

Productinput output

Continual Improvement of QMS

Value-adding activities Information flow

PDCA (Plan-Do-Check-Act)

PDCA (plan–do–check–act or plan–do–check–adjust) is an iterative four-step management method used in business for the control and continuous improvement of processes and products.

It is also known as the Deming circle/cycle/wheel, Shewhart cycle, control circle/cycle, or plan–do–study–act (PDSA).

By Wikipedia

ISO 9001:2015 : Is based upon the PDCA cycle which can be applied to

processes Applies the PDCA cycle to implementing, operating,

monitoring, exercising, maintaining and improving the effectiveness of a QMS

ISO 19011:2002 does not explicitly mention process audits, but is written for application to all management system audits

Management System Standards vsthe Process Approach

Applying the Process Approach

Auditors can apply the process approach to auditing by ensuring the auditee:

Can define the objectives, inputs, outputs, activities, and resources for its processes

Analyzes, monitors, measures, and improves its processes

Understands the sequence and interaction of its processes

Process Auditing Approaches

Individual Process: Input / Output / Value-added Activity Plan-Do-Check-Act Resources

Relationship with other processes: Flow / Sequence / Linkage / Combination Interaction / Communication Evidence Customer and supplier contract(s)

Process Auditing “Turtle Diagram”

Workshop 03

Workshop 03

Answers for Workshop 03-Turtle Diagram

3. Managing Audit Program

Managing an Audit Program Process FlowPLAN DO CHECK ACT

AUTHORIZE

ESTABLISH IMPLEMENT MONITOR & REVIEW IMPROVE

AUDITOR COMPETENCE & EVALUATION

SPECIFIC AUDIT ACTIVITIES

OBJECTIVES EXTENT ROLES RESOURCES PROCEDURES

SCHEDULE AUDITS EVALUATE AUDITORS ELECT TEAMS DIRECT ACTIVITIES MAINTAIN RECORDS

MONITOR REVIEW IDENTIFY NEED FOR CA/PA IDENTIFY OPPORTUNITIES

TO IMPROVE

Audit ActivitiesPLAN Initiating the Audit

Conducting Document Review

Preparing for On-site Activities

DO Conducting for On-site Activities

Preparing, Approving, Distributing Audit Report

Completing the AuditCHECK

Completing Audit Follow UpACT

Workshop 04

Audit Program Top management should authorize responsibility for

program management to: Establish, implement, review, and improve the audit

program Identify the necessary resources and ensure they are

provided Organization should develop audit program processes Program should be managed by a member of the

organization Keep appropriate audit records to monitor and review the

audit program

Initiating the AuditInitiating the audit includes: Appointing the audit team leader Defining audit objectives, scope, criteria Determining feasibility of the audit Selecting the audit team Establishing initial contact with the auditee

Defining Audit Objectives, Scope, Criteria

Audit Objectives may include:Determining of the extent of conformity of auditee’s QMS with

audit criteriaEvaluation of capability of QMS to ensure compliance with

statutory, regulatory, and contractual requirementsEvaluation of effectiveness of the QMS to meet its objectivesIdentification of areas of improvement

What is the difference between audit scope and audit criteria?Audit Scope – extent and boundaries of an audit.

The audit scope generally includes a description of the physical locations, organizational units, activities and processes, as well as the time period covered.

Its tells : when audit shall be conducted (start and end date) what/who are we going to audit where the audit shall be done

Audit scope shall be derived from the QMS Scope.

What is the difference between audit scope and audit criteria?Audit Criteria – set of policies, procedures or requirements.Audit criteria are used as a reference against which audit evidence is compared.

It tells what we are going to check (or audit) the conformance. what are the requirements of the audit.

Audit criteria could be a combination of the following ISO requirement (example ISO 9001, ISO 27001, ISO 14001, etc,) Statuary or Regulatory Requirement Organization Process/Policies/Procedures, etc. Customer Requirement

What is the difference between audit scope and audit criteria?Example: A company located at Selangor and Muar, is certified to ISO 9001 & ISO14001

Audit Scope ? Audit Criteria ?

What is the difference between audit scope and audit criteria?Audit Scope : Location: Selangor and Muar When: 24-March-2014 – 26-March-2014 Who: All the departments/functions within the organizations.

Audit Criteria : ISO 9001 & ISO 14001 Statuary or Regulatory Requirement related to the business in

which the company is. Organization Process/Policies/Procedures, etc. Customer Requirement

Selecting the Audit Team

For Team size and competence, consider: Audit objectives, scope, criteria, and duration Whether audit is combined or joint Competence of team to meet objectives Statutory, regulatory, contractual and

accreditation/certification requirements Independence of the team

5. Auditor Competence & Responsibilities

Auditor CompetenceAuditor competence is based on: Personal attributes Application of knowledge and skillsCompetence is to be developed, maintained, and improved

Workshop 05

Auditor Competence

PERSONAL ATTRIBUTESETHICAL

OPEN-MINDED

DIPLOMATIC

OBSERVANT

PERCEPTIVE

TENACIOUS

VERSATILE

DECISIVE

SELF-RELIANT

Auditor CompetenceAuditor skills and competence could include: Audit principles, procedures, and techniques Management system and reference documents Organizational situations Laws, regulations, and other requirements

Auditor CompetenceSpecific knowledge and skills for quality auditors could include: Quality methods and techniques Quality terminology Quality management tools and their application Processes and products/services specific to the

sector being audited

Auditor Responsibilities Arrive on time Maintain confidentiality Be objective and ethical Support the audit team and team leader Plan and prepare work documents Inform auditees of the audit process Document and support all findings Keep auditee informed Safeguard all documents Prepare the audit report

Audit Activities (Cont’d)

Audit Planning Determine the objective of the audit Identify specified requirements Determine audit duration and resources needed Select the team Contact the auditee – agree the date(s) Draw up audit plan Brief the team Prepare work documents

Conducting Document ReviewA review of documentation:

Should be conducted prior to on-site audit activities unless deferring review is not detrimental to the effectiveness of the audit

May include relevant QMS documents, records, and previous audit reports

May include a preliminary site visit

Prepare Work DocumentsA review of documentation:

Should be conducted prior to on-site audit activities unless deferring review is not detrimental to the effectiveness of the audit

May include relevant QMS documents, records, and previous audit reports

May include a preliminary site visit

Conducting Document Review Prepare work documents Use as a reference and for recording audit proceedings Include checklists, sampling plans and forms, ISO 9001:2008

standard, etc. Keep checklists flexible to allow changes resulting from

information collected during the audit Safeguard any confidential and proprietary information Retain work documents and records

Conducting Document ReviewA review of documentation: Should be conducted prior to on-site audit activities

unless deferring review is not detrimental to the effectiveness of the audit

May include relevant QMS documents, records, and previous audit reports

May include a preliminary site visit

Checklists PreparationOne Approach is to: Identify audit scope and process(es) within scope Identify applicable factors (inputs, outputs, measures,

resources, etc.) Use these points and other requirements (ISO 9001:2015, system documentation, etc.) to:

Plan what to look at Plan what to look for (audit evidence)

Prepare checklist

Workshop 06

Checklists StructureAudit checklist structure

PROCESS / ACTIVITY AUDITED: REQUIREMENT SOURCE EVIDENCE NOTES

ISO 9001:2008Clause No.

or other requirement

What to “Look At”

What to “Look For”

Conduct on-Site Audit Activities Conduct opening meeting Communicate during the audit Explain roles and responsibilities of participants Collect and verify information Generate audit findings Prepare audit conclusions Conduct closing meeting

Opening Meeting Hold opening meeting with auditee top management and

those responsible for processes audited Meeting may be informal Chaired by team leader Audit team present Purpose is to confirm all prior arrangements

Workshop 07

Collecting and Verifying Information

Collect by appropriate

SAMPLING & VERIFICATION

CONCLUDE

EVALUATEagainst audit

criteria

REVIEW

SOURCE of Info

Collect & Verify information Collect information relevant to:

Audit objectives, scope, and criteria interfaces between functions, activities and processes

Collect audit evidence by appropriate sampling and verify and record it

Be aware on sampling limitations, if acting on the audit conclusion

Use only information that is verifiable as audit evidence

Techniques to Obtain Audit EvidenceInterview: Personnel that manage, perform, and verify activities Also ensure they are responsible for the activity being

audited Listen carefully to responsesObserve: Identity, status, condition, processes, equipment,

activities, environment, and people

Audit Evidence Review documents that describe:

Activities Plans Controls Strategies Exercises Tests

Review records for evidence of conformity to documents Review records, statements of fact, or other information

which are relevant to the audit criteria and verifiable Audit evidence may be qualitative or quantitative

Communication & Interpersonal Skills Put auditee at ease Ask short questions and listen Reflect right attitude, tone of voice, body language, and

facial expressions Smile and show eye contact Avoid interruptions Avoid off-cuff and condescending remarks Give praise when appropriate

Communication & Interpersonal Skills Show interest Be tactful and polite Show patience and understanding Remember to say please and thank you Ask the right person Don`t say you understand when you do not

Conducting Document ReviewA review of documentation:

Should be conducted prior to on-site audit activities unless deferring review is not detrimental to the effectiveness of the audit

May include relevant QMS documents, records, and previous audit reports

May include a preliminary site visit

Questioning Technique Open question

Using why, who, what, where, when, or how gets more than a yes or no answer

Expansive question Further elaborates the current point

Opinion question Asks opinion about current point

Non-verbal Uses body language, for example: raise eye-brow to

elicit further information

Questioning Technique Repetitive question

Repeats back response in form of a question Hypothetical question

Uses what if, suppose that, etc. Closed question

Gets yes or no answer Avoid using too often Used for confirmation

Silence Draws more information

Note Taking Notes could be used as reference for:

Immediate investigation Investigation later Use by a colleague Subsequent audits

Notes taken during an audit are a record of: The audit sample taken What was reported What was observed

Notes may be referenced by subsequent auditor

Control of the Audit Checklist is an aid, not a requirement If potential audit trails appear, decide to:

Disregard Note for later Follow up immediately

Following audit trails may effect: Sample size Audit plan

Handling Difficult Situation

Workshop 07

Uncooperative

Cannot find document

Volunteered Information

Unprepared

Long telephone calls

Constant interruptions

Provocation

Long auditees

Boastful

Called away

Language

Noisy environment

Diversionary tactics

Interdepartmental / Personality

conflicts

Establish the FactsJudgment in the Audit Process Audit focus must be on conformity and effectiveness,

NOT on finding nonconformities The auditee must be given the benefit of any doubt where

there is insufficient audit evidence

Establish the Facts Discuss concerns Verify the findings Record all the evidence:

Exact observation Where, what, etc.

Establish why a nonconformity or otherwise State who (if relevant) – preferably by job title Obtain agreement with the facts

Generate Audit Findings Evaluate audit evidence against audit criteria to generate

audit findings Indicate if findings are conformities, nonconformities or

opportunities for improvement Meet (audit team) to review findings Specify (with supporting evidence) or summarize

conformity by location, function, or processes, as required by audit plan

Nonconformity Non-fulfilment of a specified requirement:

Not doing it Partially doing it Doing it the wrong way

Specified requirement: Conditions of the customer contract Quality standard (ISO 9001:2015) Quality management system Statutory or regulatory requirements

Generate Audit Findings Record nonconformity findings and supporting evidence Obtain auditee acknowledgement of nonconformities for

accuracy and understandability Try and resolve differences of opinion Keep a record of unresolved issues

Nonconformity - MINOR Failure to comply with a requirement which (based on

judgment and experience) is not likely to result in QMS failure

Single observed lapse or isolated incident Minimal risk of nonconforming product or service Examples:

A two month lapse in the internal audit program A training record not available No actions taken to improve system based on previous

result findings

Nonconformity - MAJOR Absence or total breakdown of a system to meet a

requirement A number of minors related to the same clause or

requirement A nonconformity that experience and judgment indicate

will likely result in QMS failure or significantly reduce its ability to assure controlled processes and products

Nonconformity - MAJORExamples: No documented procedure for a required documented ISO

9001:2008 process/activity Document changes routinely made without authorization No awareness program for the quality management

system No future planned internal audits Insufficient scope Numerous minor nonconformities found in the production

process

Classifying the NonconformityConsider the seriousness: What could go wrong if the nonconformity remains

uncorrected? Is it likely the system would detect it before the customer

is affected? If you are not certain it is a nonconformity, it is not.

You must have: A requirement that has been broken Proof that it has been broken

Good Report ExamplesNONCONFORMITY REPORT Incident No. / CAR No.: 01

Company under audit: ABC Sdn. Bhd.

Area under Review: Purchasing ISO 9001 Clause number 7.4

Category: Major Minor

Requirement:

Clause 7.4.1 of ISO 9001:2008 requires that the organization establish criteria for evaluation and re-evaluation of suppliers.

Nonconformity Findings:

Upon speaking with the purchasing Manager, it was found that no evaluation of XYZ supplier had taken place since the contract was signed and business begin with XYZ supplier.

Poor Report ExamplesThe nonconformity statements below are inadequate due to the lack of specified requirements and detailed evidence: Steering Group meeting minutes are not adequate The authority level for the Emergency Controller must be

documented for clarify purposes

Preparing Audit ConclusionsAudit team confer prior to the closing meeting: Scheduling of the audit plan To plan for closing meeting Purpose is to:

Review audit findings and other information Agree on audit conclusions

To prepare the audit report and recommendations If included in audit plan, to discuss audit follow-up

Audit ReportPrepare, Approve & Distribute1. Audit reference2. Client and Auditee details3. Audit team details4. List of auditee representatives5. Objectives, scope, and criteria6. Audit plan – dates, places, areas audited and timing7. Summary of audit process8. Audit Summary9. Uncertainty due to sampling

Audit ReportPrepare, Approve & Distribute10.Nonconformity reports11.Recommendation12.Obstacles encountered13.Any areas in audit scope not covered14.Any unresolved issues between the auditee and team15.Confirmation that audit objectives accomplished16.Confidentiality statement17.Distribution list

Audit Report Distribution

Issue within agreed time period If delayed, provide reasons and agree on new issue date Report must be dated, reviewed, and approved as per

procedures Distribute to recipients designated by audit client Report is property of audit client Recipients and audit team must respect the

confidentiality of the report

Completing the Audit Audit is complete when all activities in audit plan have

been carried out and audit report is distributed Maintain or dispose of audit documents based on

contractual, regulatory, and audit program procedures Maintain confidentiality of audit documents, information,

and report Notify audit client and auditee ASAP if disclosure of audit

information is required.

Closing Meeting Hold closing meeting to present audit findings and

conclusions Cover situations encountered during audit that may

decrease reliance on audit conclusions Discuss and resolve diverging audit findings and

conclusions Keep a record if not resolved Provide recommendations for improvement where

specified by audit objectives Keep minutes and attendance records Will normally be informal for internal audits

Completing the AuditConducting the Follow-up Audit conclusions may require corrective, preventive, or

improvement actions Auditee decides and carries out these actions within

agreed timeframe These actions are not part of the audit Audit team number should verify completion and

effectiveness of actions taken This verification may be part of a subsequent audit Maintain independence in subsequent audit activities

Completing the AuditCorrect the Follow-up Auditee receives the nonconformity report Auditee prepares and approves a corrective action plan Auditee submits the plan to auditors Auditors evaluate and approve the plan Auditee implements the approved corrective action plan Auditor verifies the implementation and effectiveness Records of all actions taken by auditor and auditee

Conclusion

Workshop 08

Q & A

THANK YOU