Improving performance, reducing risk

Auditing as a Profession

What we can expect in the Future (Tomorrow) Paul Phyall Senior Vice President – LRQA Asia

Contents

• What is an Organisation

• The Speed of Change

• The Future of Management System Standards

• What Organisations Expect / Need from Auditors

• What Auditors Must Deliver

• The Future Auditor / Audit Team / Audit

• LRQA’s “Business Assurance” Philosophy

• Concluding Remarks

What is an Organisation?

• An Organisation is a “social entity” that is structured and managed to meet a

need or to pursue collective goals

• It is linked to the external environment

• Organisations can be simple or complex

• Organisations are made up of people

and infrastructure

What is an Organisation?

Leadership / Management

Human Resources

Design Procurement

Production / Operations

Marketing / Public

Relations

Research & Development Legal

Finance

Business Strategy / Business Planning

Logistics / Warehousing

IS / IT

Infrastructure

Self

Governance

Government

Policy Law Setters and Enforcers

Customers

Contracts

Suppliers

Products/Services

Providers

NGO –Environmentalists

Influencers / Lobbyists

Community Partners

Diverse Influencers and Dependents

Regulators

HSE

Rules Enforcers

And Verifiers

Owners / Investors

Direct / Control

What is an Organisation – External Environment Interested Parties and Stakeholders

Who, What, Why and How

• Determine who they are – e.g. those that provide or control or influence and those that receive

• Analyse their individual and collective needs

• Prioritise in relation to your business strategy

• Understand and define their measures for success and find a realistic balance, (e.g. investors versus customers versus community)

• Ensure management systems are designed appropriately meet needs and implement well

• Manage known risks and measure performance and be prepared to react to results

• Review regularly as stakeholder needs WILL change, often rapidly

The Speed of Change

• Everything is a process of change, nothing endures; we do not seek permanence - Masatoshi Naito

• Progress is impossible without change, and those who cannot change their minds cannot change anything – George Bernard Shaw

• The rate of change is not going to slow down any time soon. If anything, competition in most industries will probably speed up even more in the next few decades – John P Kotter

• If the rate of change on the outside exceeds the rate of change on the inside, the end is near – Jack Welch

• It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change - Charles Darwin in his “Origin of Species”

The Future of Management System Standards

• The Future is now

• Multiple management system standards

• Annex SL (previously ISO Guide 83)

• Common Text Requirements (a common platform)

• Major Revisions to 9001, 14001, 18001

• Managed Risk and Improved Performance

• Technology enabled businesses

We shall consider the impact of Annex SL on Auditors later

What Organisations Expect / Need from Auditors

• Compliance

• Reputation

• Professionalism and Advice

• Risks and Opportunities identified

• Minimum disruption

• Value added audits

• Management systems specialist

• Knowledge of their sector / industry

• Confidence in self-governance and controls

• Assurance

What some Organisations may also Expect / Need from Auditors

• Knowledge and experience to audit requirements of multiple MS standards

• Knowledge and experience to audit beyond requirements of MS standards

• High levels trust, respect, confidence, ability and the professional image to audit and/or report in the Boardroom

• Audits of Strategy and Business Execution Plans

• Inclusion of strategic/tactical level risks in audits

• Ability to audit global supply chains

• Business Assurances about the whole business, including corporate IS/IT projects for example

• Relate audit activity and findings to the financial and non-financial targets and performance of the organisation

What Auditors Must Deliver

• Are these systems actually helping them to be more competitive (e.g. reducing

costs, improving efficiency, winning

more business)?

• Are these systems actually supporting

the delivery of their business strategies and objectives?

• Are these systems actually improving

stakeholder satisfaction? Do the measures demonstrate this?

• Are these systems actually reducing legal and other risks?

The Future Auditor / Audit Team / Audit

• Management systems knowledge

• Multiple standard competence and capability

• Provide specialist support

• Change ambassadors

• Greater understanding of how a successful business functions/operates

• Provide insights into the management system meeting future stakeholder challenges and strategy

• Creating opportunities and value adding

• People ambassadors

• Modern technology enabled

LRQA’s Business Assurance Philosophy

Auditor Must Deliver

• Compliance to the management systems standard

• Converse on an equal status with corporate executives to junior employees

• Systematically analyse corporate strategies, key business initiatives & issues and associated risks

• Able to evaluate the design, effectiveness and efficiency of the management system commensurate with business intent

• High integrity decisions based on analysed individual (micro) and complex multiple (Macro) data-sets

• Persuasive and positive people skills and behaviours

In Conclusion

• Organisations are or will become more complex as traditional boundaries shift and stakeholder demands and expectations become increasingly more challenging

• Organisations are managed/operated by people increasingly enabled by advancing technologies

• Organisations must continually change to be successful and sustainable. Be sure your competitors are not standing still

• Auditing must provide insight, confidence and assurance, past, present and future

• Auditing is a profession requiring very high levels of knowledge, skills, experience and judgement which must continue to evolve as organisations continually change

Our unique assessment methodology

Business Assurance from LRQA helps

you to manage your systems and risks

to improve and protect the current and

future performance of your organisation

Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates.

Copyright © Lloyd’s Register Quality Assurance Limited 2013. A member of the Lloyd’s Register group.

Improving performance, reducing risk

Paul Phyall Senior Vice President LRQA Asia T +65 6278 9444 E paul.phyall@lrqa.com Lloyd’s Register Quality Assurance Limited 460 Alexandra Road, #28-01/02, PSA Building, Singapore 119963