05 - internal audit

8/18/2019 05 - Internal Audit

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Internal Audit

Contents

Internal Audit Definition

Types of Audit

Auditors Role

Benefits of Internal Audit

Disadvantages of Internal Audit

Audit Phases


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Internal Audit Definition

Systematic, independent and documented process for

obtaining audit evidence and evaluating it objectively

to determine the extent to which audit criteria are

fulfilled

Audit Types

1st Party Audit - “Us On Us” - (Internal)

2nd Party Audit - “Us On Them” - (Supplier Audit)

3rd Party Audit - (Independent organization

perform audit on us on behalf of other parties).


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Auditors Role

To objectively audit the working practices against

standards, procedures and other planned

arrangements

To report the results to the Management Team and

all other concerned parties

To assist understanding and interpretation.

Benefits of Internal Audit

1. Increased confidence of system effectiveness

2. Highlights weak areas and new requirements

3. Improves understanding of the system

4. Identifies means for continual improvement

5. Supports a preventive culture


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Disadvantages of Internal Audit

Causes anxiety

Uses peoples time

Disrupts daily works

Audit Phases

1. Planning Phase

2. Field Work Phase

3. Reporting Phase

4. Follow-up Phase

Plan

40%

Field Work

40%

Report

10%

Follow-up

10%


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Planning Phase

Scope

Schedule & frequency

Assign resources

Study documents

Determine sampling technique

Logistic Preparation

Notify Auditee

Prepare Checklist

Checklist

Structured guide

Aid memory

Expedite audit field work

Formatted or not?

Printed or not?

Not mandatory


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Field Work

Opening Meeting

Examination

Evaluation

Closing Meeting with Auditee

Opening Meeting

Introductions

Scope - what you will be examining

Time - how long you intend to take

Conduct - how you will conduct the audit

Disclaimer – no problems found does not mean non exist

Categories of findings

Feedback - the closing meeting schedule

Guide - sometimes required for external auditor


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Examination

Interviews

Checking document & record

Observation of current activities

Make notes - record ALL observations

Explain possible nonconformities

Stick To Schedule

Auditor & Auditee Behavior

Confrontational

Remain calm and focused

Time wasting

Imply that you may have to extend the audit

Distraction

Stick to the audit

The ‘Bended Knee’

Ignore


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Auditor & Auditee Contest

Self Pity

Be understanding... Then press on

Amnesia

Make notes... Get the evidence yourself

‘No One Here !’

Ask for deputy - or withdraw and report

Fixed Evidence

Always obtain the evidence yourself

Questioning Techniques

Open questions vs. Closed questions.

Ask for objective evidence

Phrase questions to suit Auditee’s understanding

Ask others the same questions - to ensure common

understanding


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Auditor - “Do”

1. Be diplomatic

2. Keep control

3. Be unbiased

4. Be aware and observant

5. Listen

6. Be prepared

Auditor - “Don't”

Give in

‘Nit Pick’

Accept Anything As Fact

Impatient

Pessimistic

Arrogant

Unprofessional (Code of Ethics)

Ignorant


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Auditee – “Do”

Check and read system documents

Check your records

Inform your department/team

Be clear on the audit scope

Confirm audit scope at the opening meeting

Be brief, polite & truthful

Do not answer questions that have not been asked

Audit Result

Deficiencies obtained During field work:

1. Major Nonconformance

2. Minor Nonconformance

3. Observations


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Major Nonconformance

Contradiction with standard and/or

Documented Quality Management

System, such as:

1. An applicable clause of the standardhas not been addressed

2. Failure of management system. Frequency of related Minor

nonconformance is unacceptable

Minor Nonconformance

Momentary lapse in the system

Examples.

1. Isolated incident

2. Incorrectly filed

3. Signature omitted


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Observations

Not a nonconformance at the time

But there is a risk of the observation becoming a

nonconformity if ignored

Wash-up Meeting

The evaluation - (Pre-closing meeting)

The Auditee is not party to this stage

Auditors attendance only.

Analyze the notes

Determine nonconformance (Maj. or Min.)

Note other observations to be reported


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Closing Meeting

Thank Auditee

Disclaimer

Present the nonconformities

Present the observations

Ensure understanding of all points

Discuss corrective/preventive action

Indicate timing of the report and general format

Usual courtesies and take your leave

Reporting Phase

Identification

Purpose, Scope, Objective

Details of;

Audit Schedule

Auditor and Auditee

Organization, area, location

Reference to audited area’s documents

Nonconformance - Observations - Evidence

Recommendations, Conclusions and Summary

Distribution List


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Follow-up Phase

Accessible

Corrective action implementation & effectiveness

Determine next audit date and scope

InaccessibleNew follow-up date

Re-audit

Workshop

Review the document to:

1. Identify any mistakes or missing information

2. Recommend for necessary improvement

3. Prepare audit check list

05 - internal audit

Documents