HSE Auditing

byAdebiyi Adeleke Adeosun

Paradigm Environmental System Consultants,Lagos.

Why is HSE Audit becoming popular?

• Increasing corporate sensitivity to HSE problems

• Increasing complexity of the regulatory programs

“Corporate managers wants to verify the quality and effectiveness of their firms HSE MS- processes and procedures”

Why is HSE Audit becoming popular?

HSE Audits are defined as a systematic, documented, periodic and objective review of facility operations and practices related to meeting HSE requirements

“they are different from regulatory agency inspections in that they are performed by or on behalf of the regulated entity, and deal with broader concerns than compliance with a single regulatory program

Audits can be modified to achieve following objectives

• Identification of both regulated and unregulated risks to health and environment associated with processes and operations conducted on site

• Identification and evaluation of opportunities for waste minimisation

• Identification and planning and budgetary purpose, of those control investment necessary to meet anticipated regulatory developments

• Identification and evaluation of risks and liabilities involved in past on site and offsite disposal practices

• Assessment of facilities emergency response capabilities

• Identification and evaluation of regulatory requirement and potential liabilities associated with major modification to existing facilities

• Compliance with regulatory requirement

Audits can be modified to achieve following objectives contd.

Audit- a process which

…. Collects, analyse, interprets and documents information sufficient to achieve objectives

…..includes specific procedures to promptly prepare candid and appropriate written report on findings, corrective action, schedule and implementation

……quality assurance procedures to assure the accuracy and thoroughness through supervision, independent internal review and evaluation

Two main criteria for effective audit• First, audit should be designed to be as comprehensive

as possible given the specific objectives in– Identifying activities and – Conditions Which could have adverse effect

• Second, it should not be seen as a one-time-only occurrence but as an integral part of the rational management process that includes evaluation of any problem identified in terms of potential consequence

Given these two criteria, a good audit should be multidimensional

•Compliance• risk evaluation

Essential Element of an Effective Audit

• Top management support and commitment to follow up on audit findings

• Simple and manageable audit process• Utilisation of in-house personnel where possible• Appropriately trained staff• A standardised approach• Specific audit program objectives, scope,

resources and frequency

Contd.

• Sensitivity to confidentiality• A process that obtains appropriate and

sufficient information• Procedures for documentation of findings,

follow up on corrective action of schedule for implementation

• A process that includes quality assurance procedures to ensure the accuracy of audits

AUDITTYPE

ITEMSCONSIDERED

ORGANISATIONAFFECTED

MANAGEMENT

FUNCTIONAL

INSPECTION

COMMITTMENT

POLICIES

ORGANISATIONAL EFFECTIVENESS

RESOURCESREPORTING LINES

PROGRAMS AND PERMITS IN PLACE

TRAINING PROCEDURES

QA/QC

PROCEDURAL PRACTICESRECORD KEEPING PRACTICES

TRAINING /AWARENESS

HOUSE KEEPING

PHYSICAL COMPLIANCE OF FACILITY

TopManagement

MiddleManagement• Operations• Facility• HSE

Direct Labour• Operations• Facilities

Pre Audit Activities• Select activity or activities to be audited• Ensure top management commitment

• Select audited objectives• Define audit scope

• Select audit team• Ensure independence and objectivity

Plan• Define roles and responsibilities• Ensure top management commitment

Prepare audit team• Understand activities and management system• Review previous audit/review

• Prepare questionnaire• Review questionnaire• Develop checklist

On site Activities

• Discuss with personnel on site

Carry out a SWOT Analysis• Determine standard

Gather evidence• Inspect activities, processes• Review documents

Evaluate findings• Determine performance• Check for non conformances

Prepare audit findings and conclusions

Post Audit Activities

Prepare Audit ReportCommunicate to the company

Follow Up

Audit follow up•Develop corrective action plan•Establish mechanism to ensure

follow up

HSE Management System Aspects

• Corporate Policy• Standard Operating Procedures• Organisational Assignment of

responsibilities/authority• Internal Inspection and evaluation system• Reporting system• Training and continuing education• Planning

Types of Audit

• Regulatory Compliance Audit (RCA)• Process Safety Audit• Occupational Health Audit• Product Quality Audit• Liability Audit• Management System Audit

Assessing Strength and Weakness

• Compile a list of issues from the questionnaires

• Rank issues in terms of risk• Compare obtained response with

– Policy objectives– Regulatory standards– Self-set targets– Industry best practices

Internal Audit Program

• Definition

A relatively inexpensive proactive approach to staying on top of HSE regulatory onslaught, while keeping current with technological practices

HSE Audit

…. is a means of measuring the performance of HSE activities or practices at a facility against some standards or commitment

Standards?

“Standards” – generally written documents accepted by or imposed upon program management.

These documents then serve as yardsticks of measurement of performance

Standard

Standards could be anything from– Federal– State– Local– Codes– Regulations to be established from engineering specs– Standard Operating Procedures (SOP)– Good management practices– Corporate or departmental policies– or just plain “common sense”

Sufficient and reliable information

• Factual• Adequate• Convincing• Consistent• Candid• ClearThrough the use of appropriate techniques in

– Interviewing

Why Internal Audit

“ If an appropriate effort is initiated by a facility for internal audit, then the facility should adequately be prepared for external audit.

Audit is a tool.

Audit a tool?

• Management Tool– Appraisal of current compliance– Improvement of corporate image– Early warning device for impending problems

• Training Tool (Dry run)– Increasing overall level of awareness

Audit a tool? (contd.)

• Risk Management Tool– Improvement of risk management system by

reducing HSE risks and liabilities

• Management accounting Tool– Control of compliance cost

• Line Management Tool– Improvement of overall performance at operating

level

Audit a tool? (contd.)

• Program-wide Tool– Development of proactive management program

for optimising resources

• Bottom-line Tool– Reducing/elimination of non-compliance

conditions and fines due to violation

Points to note!

Do not execute an internal audit of a facility unless top management intends to correct all non-compliance conditions or provide a reasonable schedule for implementation of corrective actions.

Audit documents are tenable for criminal prosecution of individual as well as citation and fines against corporations

Once an audit of a facility is conducted and documented, the documentation can, under certain circumstances, be requested by regulators

Basic Audit Tools

• The S/H/E audit process is most commonly supported by some important tools: the audit protocol and the working papers.

Audit Protocols

• Names for the various documents that guide the auditor while conducting the audit include audit protocols, audit work programs, review programs, checklists, and audit guides.

• An audit protocol represents a plan of how the auditor is to accomplish the objectives of the audit.

Audit Protocols……..

• An audit protocol also provides the basis for assigning specific tasks to individual members of the audit team, for comparing what was accomplished with what was planned, and for summarizing and recording the work accomplished.

• A well-designed audit protocol can also be used to help train inexperienced auditors and reduce the amount of supervision required by the audit team leader.

• The audit protocol itself is a listing of auditing procedures that are to be performed to gain evidence about safety, health, and environmental practices.

Who performs the audit ?

• Knowledge of auditing process• Knowledge of all applicable regulations and standards• An independent viewpoint• Familiarity with facility history and processes• Knowledge of corporate policy• An understanding of facility organisation• Knowledge of facilities management philosophy• Sensitivity to employees concerns

Basic qualities/skills of any auditor

Use of consultants

• Experience in auditing process• Current expertise in multiple regulatory programs• Obtaining an impartial survey of facility• Quick turn around time• Minimal time spent and involvement by facility

personnel

Advantages

Review all materials obtained

• All materials received must be– Thoroughly and critically reviewed

• Design and develop follow up question where necessary information is missing or poorly communicated

• Identify– Key players– Key issues– Types of facilities– Programme Strength and Weakness

Preparation of Working Papers• Prepare a pre-visit questionnaire

a) List items to be provided to the team for review which may include

• Permit

• Inspection/Training records

• Analytical data

• Site inspectionb) A list of the questions to be answered concerning

• Organisational chart

• Resource allocation

• Assigned responsibilities

• Physical plant layout

Make responses simple – Yes or No or Not

Applicable

Preparation of Working Papers

Lastly, send out pre-visit questions to the operations to be audited to be accompanied by an appropriate letter from the top management to announce the HSE audit

• topic• issues• timing

List of departments that must be involved in the HSE Audit

• Management• Operations• Maintenance• Legal• Purchasing• HSE• Facility Support Engineering• QA• Emergency Response

Basic Structure of a well executed audit

• Pre Audit• Field Visit• Post Audit• Follow-Up

Pre Audit Activities

• Determination of goals and objectives• Selection of targets, subject and scope

(Scoping meeting)• Plan and Schedule (Planning meeting)• Preparation (checklist, questionnaires)• Kick off (Pre visit exchange of information)• Review of materials recieved

Objectives

Objectives are created by top management

They may be part of– compliance order– Consent decree– Settlement agreement with regulatory agencies

Audit ObjectivesDetermine conformance of the HSEMS with the audit criteria

To determine whether the HSEMS has been properly implemented and is being maintained

To identify areas for potential improvement

Assessment of the internal management reviews process to ensure continuing suitability and effectiveness of the HSEMS

Audit Objectives

Objective Evidence

Objective evidenceObjective evidence Examination of system documentation

Interview, demonstrating training, understanding and competence

Observation of actual practice or physical evidence demonstrating compliance/control

Records (data, lists, report) demonstrating compliance/ capability/ performance

““First hand” evidence, First hand” evidence, based on witnessed based on witnessed

facts, not supposition, facts, not supposition, presumption, hearsay, presumption, hearsay, rumour, conjecture etcrumour, conjecture etc

Records…• OS&H Policy• Safety organization chart• Training Records on safety, fire and first aid• Accident investigation reports• Accidents and dangerous occurrences-Statistics

and analysis• Records of tests and examination of equipment

and structures• Safe operating procedures for various operations

Contd.• Record of work permits• Record of monitoring of flammable and

explosives• Maintenance and testing records of fire

detection and fire fighting equipment• Medical records of employees• Records of industrial hygiene surveys(noise,

ventilation, illumination levels, airborne and toxic substances, explosive gases)

• MSDS

Contd.• Onsite emergency plans and record of

mockdrills• Records of waste disposal• Records of effluent discharge to the

environment• Housekeeping inspection records• Minutes of Safety committee meetings• Approval of layouts and other approvals from

statutory authorities

Contd.• Records of any modifications carried out in

plant and process• Maintenance procedure records• Calibration and testing records• Shutdown maintenance procedures• In service inspection manuals, records

including that of material handling• Safety Budget• Statutory Records, Previous audit reports,

Transportation of Hazardous substances

Strategy

This is the guideline to accomplishing objectives

It may be:– Assess organisational effectiveness (management

audit)– Assess facility operational effectiveness (facility

audit)– Assess facility condition (physical inspection)

FrequencyThis is dependent on

1. The activity type or industry2. Internal/External pressure3. Program conditions

It may be a yearly (annual), two-or-three year cycle program or optionally1st year – occupational health audit2nd year – safety audit3rd year – Behavioral safety audit

Scope (select Target, Subject,)

• Target – Small aspect of a facility– Entire facility

• SubjectThis may be regulatory or self assessment

program

Depth

Once target and subject is set, a decision must be taken on the depth and breadth of efforts

A detailed look at all documents related to:–Management strategy–QA–Maintenance system–HSE records

could be undertaken

Plan and Schedule

Good communication is critical here.• Inform auditees of

– Purpose– Extent of involvement– Schedule

• Plan and know– Who is auditing what– Who or what authorises the audit

Be sensitive of operational schedules- Do not waste people’s time

Have an estimate of time needed to visit site and look over document, then double it.

Finally, stick to your schedule.

Plan and Schedule

Reporting Findings• The report should follow the below format

– A brief introduction• Purpose• Authority• Strategy• Terms of Refefence• Scope

– Report of the site/facility inspection• Evaluation of records• Non compliances/Conformance• Areas for improvement• Conclusion

Reporting Findings

• Recommendations

• Follow Up Action Plan

The report should have an executive summary where a synopsis of the entire report is included

Post Audit Activities• Corrective Action

– Documentation of Action Close-Out– Documentation of Action Plan

• Development of Critical Success Factor (CSF)– Commitment– Allocation of Resources– Budget

• Follow Up and Verification (Cross Functional)

Evaluating Finding and Result

• Rules– Do not draw unsubstantiated conclusions– State the exact nature of the problem– Avoid generalisation– Use familiar terminologies– Communicate extent of the problems

• Compliance• Non compliance

Evaluating Finding and Result

• Follow the below steps– Priorities the problems/impact– Allocate responsibilities– Develop an action plan– Implementation of the plan– Assess the effectiveness of the plan and

recommend change where necessary– Document and communicate

Conducting and audit (types of information)

Verbal

Physical

Documentary

Circumstantial

Anecdotal

Interviews

Site visit &

Observations

Reviews

ObjectiveEvidence

Collecting audit evidence: Document review

Documents to reviewed include

Records of complaints and prosecution

Procedures and work instruction

Previous audits and inspection

reports

Legal documents-permits, waivers

EIA, EER report

Monitoring data

HSE Case/HSE MS

Process flow diagrams

Site and plant layout plans and diagrams

Incident records

Training records

Collecting audit evidence: Site visit

Examples of areas to focus on during

site visit

Points of discharge to

surface waterGeneral

housekeeping

Accident & Emergency procedures and

activities related to actual or potential

hazards

Waste storage and disposal facilities

Chemicals and drum storage

Diesel storage area

Audit findings

Audit findings

The audit team must review all of the audit evidence to determine whether the HSEMS conforms to audit criteria

Nonconformity issues are properly documented in a clear and concise way and are supported by objective audit evidence

The audit findings needs to be reviewed with the auditees

The audit findings should be agreed between the auditors and the auditees

Audit findings

Audit findings

Major non-conformances

Minor non-conformances

Observation

Legal Issues and Protection of Audit Document

States:

• The attorney-client privilege

• The work-product privilege

• The self evaluation privilege

Gathering Audit Evidences-Field visit

Arrange a meeting or preferably informal session with each group

–Explain the purpose–Authority –Confidentiality agreements–Facility to be audited–Documents to be surveyed

Establish good rapport.

Gathering Audit Evidence- Review program/documentations

• Present previous findings• Interview with pre-designed questionnaires• Questions must be in three parts

– Management (policies/resources)– Senior management (system)– Technical questions (procedures, process,

guidelines)

Out briefingTwo separate sessions

– Management must be briefed first– All other key participants should be invited to a

general facility outbriefing

Outbriefing should be brief normally (15-30 mins)

Review• Good highlights• Bad highlights

Outbriefing

Take note of areas for improvement and stress that they are general impressions and that more detailed comment will be produced in an indepth report.