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 Auditing Fundamentals Auditing Fundamentals

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 A. Basic terms and concepts A. Basic terms and concepts

Auditing

Quality

Quality Assurance

Quality Control

Non-conformity

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 Auditing  Auditing 

³systematic, independent and documented process for 

obtaining audit evidence and evaluating it objectively to

determine the extent to which audit criteria are fulfilled´

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Q uality Q uality 

³degree to which a set of inherent characteristic fulfils

requirements´

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Q uality AssuranceQ uality Assurance

³part of quality management focused on providing

confidence that quality requirements will be fulfilled ´

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Q uality Control Q uality Control 

³part of quality management focused on fulfilling quality

requirements´

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N onN on- -conformity conformity 

³non-fulfilment of a requirements ´

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P urpose of auditing P urpose of auditing 

to determine conformity

to determine the effectiveness to provide opportunity to improve

to meet regulatory requirements

for certification

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R easons to conduct an audit R easons to conduct an audit 

new supplier 

regular review of suppliers

contractual requirement

changes in the system

increased orders

quality problems

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BenefitsBenefits

Give the management confidence

Gain market and customer confidence

Gain confidence of employees

Observe operational problems

Provide opportunity for improvement

Provide feedback for corrective and preventive actions

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Classification of audits (Internal/ External)Classification of audits (Internal/ External)

Internal auditInternal audit ± Performed within an organization to

measure its own performance

ExternalExternal audit- by an organization on an outside party (e.g.

supplier)

 ± Or the audit of an organization by an outside party (e.g.

Client or ISO 9001 certification body)

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Classification of audits (based on auditing party)Classification of audits (based on auditing party)

First PartyFirst Party - by an organisation on itself for their own

purposes (Internal)

Second party auditSecond party audit - by an organisation on another 

organisation e.g. by customer on the supplier (External)

Third party auditThird party audit - by an independent organisation typically

for certification. (External)

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Classification of audits (based on scope)Classification of audits (based on scope)

System auditSystem audit ± concentrates on

overall quality system

Process auditProcess audit ± concentrates on

process

Product auditProduct audit ± concentrates on

one or more products or services

System audit 

 Process audit 

 Product audit 

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S ystem Audit S ystem Audit 

Can be most extensive audit

May break overall system audit into small system audits

May investigate the effect of system on the product or 

service

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P rocess Audit P rocess Audit 

Is less extensive than system audit

Needs less planning than the system audit

Focuses on specific process element

Generally requires lesser auditing effort than the system

audit

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P roduct Audit P roduct Audit 

Assessment of final product or service against the

requirements or the purpose

Generally requires lesser auditing effort than System or Process audits.

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S ome other type of auditsS ome other type of audits

Assessment Assessment ± less formal and limited in scope

Compliance AuditsCompliance Audits-- to audit compliance to contractual

agreements, procedures or standards. PrePre--Award Surveys Award Surveys-- conducted prior to awarding a contract

Desk auditDesk audit ± Review of quality documents to ensure compliance

to higher level documents, and to familiarize auditor with the

auditee¶s quality system (generally prior to an audit)

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 Audit Criteria Audit Criteria

Auditing Standards Auditing Standards ± ISO 19011

Industry Specific StandardsIndustry Specific Standards --

Automobile industry ISO 16949 Aerospace industry AS 9100

Petroleum, Petrochemicals and Natural gas Industry ± ISO 29001

Medical Devices ± ISO 13485

Testing and Calibration Laboratories ± ISO 17025

Telecommunication ± TL 9000

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 Audit P articipants Audit P articipants

Lead Auditor 

Auditors

Client

Auditee

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 Audit Independent and Objectivity  Audit Independent and Objectivity 

IndependenceIndependence ± auditors are independent when they

render impartial and unbiased judgment in the conduct of 

their engagement. Independence is established by the organizational and

reporting structure.

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 Audit Independent and Objectivity  Audit Independent and Objectivity 

ObjectivityObjectivity ± auditors should have no personal or 

professional involvement with the area being audited; and

should maintain an un-biased and impartial mindset inregard to all engagements.

Objectivity is a mental attitude which internal auditors

should maintain while performing engagements.