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INTERNAL AUDIT
Auditing Technique
Det Norske Veritas AS. All rights reserved Slide 210 June 2009
The Purpose
WHY AUDIT?
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Det Norske Veritas AS. All rights reserved Slide 310 June 2009
Management System Audit
Whats done in an audit ?
Effectiveness of an organisations Management System is assessed
Det Norske Veritas AS. All rights reserved Slide 410 June 2009
Why Audit
Required by the standard
Determine system effectiveness
Identify existing nonconformities
Highlight areas of strength
Point out areas for improvement
Indicate requirements forcorrective and/or preventiveaction
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Det Norske Veritas AS. All rights reserved Slide 510 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 610 June 2009
System Audit
The process of assessment has to be
OBJECTIVE
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Det Norske Veritas AS. All rights reserved Slide 710 June 2009
System Audit
Assessment is a comparison of implemented Quality System with QualitySystem Standards like ISO 9000 or, implemented OHS system withOHSAS18001
However results depend on Auditor
- hence this training
Det Norske Veritas AS. All rights reserved Slide 810 June 2009
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 onlyassess
The Degree of Compliance
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Det Norske Veritas AS. All rights reserved Slide 910 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 1010 June 2009
Questions in an auditors mind
Is the system right and sufficient?
Does the organisation do the right things to adequately control quality ofproducts or safety of employees?
Does the organisation do things properly all the time?
What is the evidence that things are done correctly?
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Det Norske Veritas AS. All rights reserved Slide 1110 June 2009
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 thearea to be verified is Issue of Purchase orders in time. How would you answerall the above questions ?
Det Norske Veritas AS. All rights reserved Slide 1210 June 2009
Auditor
Needs to judge whether an organisation has arrived at a sensible andacceptable 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 toinadequacy
- take account of others opinion
- always use common sense
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Det Norske Veritas AS. All rights reserved Slide 1310 June 2009
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 onlyassess
THE DEGREE OF COMPLIANCE
Det Norske Veritas AS. All rights reserved Slide 1410 June 2009
System Audit
Systematic, independent and documented process for obtaining evidenceand evaluating it objectively to determine the extent to which the audit
criteria is fulfilled
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Det Norske Veritas AS. All rights reserved Slide 1510 June 2009
Types of Audit
Internal Audit
External Audit
Third Party Audit
Det Norske Veritas AS. All rights reserved Slide 1610 June 2009
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)
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Det Norske Veritas AS. All rights reserved Slide 1710 June 2009
Audit conventions
Audits create stress. Uncertainty amplifies stress
- Act predictably
Det Norske Veritas AS. All rights reserved Slide 1810 June 2009
Why conventions?
To reduce stress
To have clear methods of audits
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Det Norske Veritas AS. All rights reserved Slide 1910 June 2009
Audit conventions
Start at the top Audit must be planned
Examination/Evaluation
Reports
Follow up action
Det Norske Veritas AS. All rights reserved Slide 2010 June 2009
Types of audit
Process
Product
Quality System
Compliance
Health & Safety
Environmental
Financial
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Det Norske Veritas AS. All rights reserved Slide 2110 June 2009
WHAT IS AN AUDIT?
A health check Key words
- Systematic
- Documented
- Periodic
- Objective
- Verification
Det Norske Veritas AS. All rights reserved Slide 2210 June 2009
KEY CONCEPTS
Verification Evaluate compliance to requirements
Systematic Carried out in accordance to set protocols
Periodic Conducted to established schedule
Objective Auditors have some independence and findings need evidences
Documented Reports are prepared
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Det Norske Veritas AS. All rights reserved Slide 2310 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 2410 June 2009
AUDIT TERMINOLOGY
Audit Protocol/Procedure:
- detail of individual audit including:
- audit scope
- audit frequency
- audit methodologies
- personnel and experience
- documentation required
- reporting and distribution
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Det Norske Veritas AS. All rights reserved Slide 2510 June 2009
AUDIT SCHEDULING
Unscheduled - usually prompted by:- Significant change in personnel
- Change in regulations
- Process change
- Customer complaint
Det Norske Veritas AS. All rights reserved Slide 2610 June 2009
Process to be
Audited
02
Q1
02
Q2
02
Q3
02
Q4
03
Q1
03
Q2
03
Q3
0
Q
Procurement x x
Marketing x x
Design
x x x xQuality Assurance x x x
Production x x
AUDIT PROGRAMME
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Det Norske Veritas AS. All rights reserved Slide 2710 June 2009
Actual
Performance
Time
audit&
review
audit&
review
audit&
review
contin
ualim
prove
ment
Baseline 1
Baseline 2
Baseline 3
HOW TO ACHIEVE CONTINUALIMPROVEMENT
Det Norske Veritas AS. All rights reserved Slide 2810 June 2009
AUDIT TEAM REQUIREMENTS
Audit team should include experience as:
- Team leader
- Systems auditor
- Technical specialist
- If not resourced internally then externally
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Det Norske Veritas AS. All rights reserved Slide 2910 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 3010 June 2009
STAGES OF AN AUDIT
Pre-audit activities
Audit activities
Post audit activities
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Det Norske Veritas AS. All rights reserved Slide 3110 June 2009
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.)
Det Norske Veritas AS. All rights reserved Slide 3210 June 2009
Audit by departments
Audit by clauses
Auditing by process , risk , aspects
Auditing Approaches
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Det Norske Veritas AS. All rights reserved Slide 3310 June 2009
Checklists are advised they are not mandatory
They are an auditors Friend
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
Det Norske Veritas AS. All rights reserved Slide 3410 June 2009
AUDIT ACTIVITIES
Opening meeting
Review documents
Interview
Collect evidence/site inspection
Closing meeting
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Det Norske Veritas AS. All rights reserved Slide 3510 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 3610 June 2009
Audit Activity
Auditor refers the checklist, which is a question to himself. He then asks relevantquestions 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
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Det Norske Veritas AS. All rights reserved Slide 3710 June 2009
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)
Det Norske Veritas AS. All rights reserved Slide 3810 June 2009
Examination
of Documents
Verification
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Det Norske Veritas AS. All rights reserved Slide 3910 June 2009
Observation of
Activities and
Conditions
Verification
Audit where the action is!- task observation is a powerful method of verification
Det Norske Veritas AS. All rights reserved Slide 4010 June 2009
Review requirements vs. records
Observe practice vs. requirements
Conduct interviews
to verify awarenessand understanding
Check how is routine work handled
Does the system work when something non routine comesup?
Are things in control in a crisis?
How to Collect
Objective Evidence
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Det Norske Veritas AS. All rights reserved Slide 4110 June 2009
What? Why?
When?
How? Where? Who?
AUDIT ACTIVITIESINTERVIEWING SKILLS
Det Norske Veritas AS. All rights reserved Slide 4210 June 2009
AUDIT ACTIVITIES
INTERVIEWING SKILLS
Closed Question
- Do you know measurement of noise level in ambient air?
Open Question
- How noise level in ambient air is measured ?
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Det Norske Veritas AS. All rights reserved Slide 4310 June 2009
AUDIT ACTIVITIES INTERVIEWINGSKILLS
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!
Det Norske Veritas AS. All rights reserved Slide 4410 June 2009
AUDIT ACTIVITIES
INTERVIEWING SKILLS 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
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Det Norske Veritas AS. All rights reserved Slide 4510 June 2009
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!
Det Norske Veritas AS. All rights reserved Slide 4610 June 2009
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!
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Det Norske Veritas AS. All rights reserved Slide 4710 June 2009
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
Det Norske Veritas AS. All rights reserved Slide 4810 June 2009
AUDIT ACTIVITIES
Exercising Judgement
- what is the requirement
- how to investigate
- what to investigate
- who to speak to
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Det Norske Veritas AS. All rights reserved Slide 4910 June 2009
INTERVIEWING SKILLS
On completion- say Thanks!
Det Norske Veritas AS. All rights reserved Slide 5010 June 2009
POST AUDIT ACTIVITIES
Audit reporting - distinguish between
- observations
- interpretations
- assessments
- judgements
- opinions
- advice
- Recommendations
- Non-conformities
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Det Norske Veritas AS. All rights reserved Slide 5110 June 2009
Requirement Failure Evidence
WRITING OF NON-CONFORMITIES
Non-conformities must be basedon objective evidence
Det Norske Veritas AS. All rights reserved Slide 5210 June 2009
Audit Observation
CASE STUDY
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Det Norske Veritas AS. All rights reserved Slide 5310 June 2009
REMEMBER
The thoroughness and integrity of the internal audit might go some wayto doing the certifiers work
- external auditors can rely on and therefore use in their own audit many
of the internal audit results
Det Norske Veritas AS. All rights reserved Slide 5410 June 2009
Open forum
Discussion
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Det Norske Veritas AS. All rights reserved Slide 5510 June 2009