Conduct Internal Audit

Edited by Mark Zonio, Lynn, Anonymous, Emmanuel M. Lardizabal and 14 others

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Organizations conduct internal audits at planned intervals to determine whether Quality Management System conforms to the planned arrangements and requirements of the International Standard. This determines if Quality Management System is effectively implemented and maintained. In this page you will further understand how internal audit is implemented, including the necessary skills and techniques which can help you conduct audit in your organization.

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Types of Audit

International Standards emphasize the importance of audits as a management tool for monitoring and verifying the effective implementation of an organization's quality and/or environmental policy.

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ISO/TS 16949:2009 is an International Standard developed by IATF and Japan Automobile Manufacturer Association(JAMA), supported by ISO/TC 176.

The goals of ISO/TS 16949:2009 are:

  1. 1
    Continual Improvement - The organization shall continually improve the effectiveness of the Quality Management System through the use of the quality policy, quality objectives, audit results, analysis of data, corrective and preventive actions and management review.
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  2. 2
    Emphasis on defect prevention - The organization shall determine action to eliminate the causes of potential nonconformity in order to prevent their occurrence.
    Preventive actions shall be appropriate to the effects of the potential problems.
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  3. 3
    Reduction of variation and waste in supply chain - The organization shall identify and eliminate waste in every area of a business, including production, customer relations, product design, supplier networks, and factory and business administration.
    Audit is a systematic, 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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The types of audit are:

  1. 1
    Quality Management System audit (ISO/TS 16949:2009 clause 8.2.2.1) - The organization shall audit its quality management system to verify compliance with this Technical Specification and any additional quality management system requirements.
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  2. 2
    Manufacturing process audit (ISO/TS 16949:2009 clause 8.2.2.2) -
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The organization shall audit each manufacturing process to determine its effectiveness.

  1. 1
    Product audit (ISO/TS 16949:2009 clause 8.2.2.2) - The organization shall audit products at appropriate stages of production and delivery to verify conformity to all specified requirements, such as product dimensions, functionality, packaging and labeling, at a defined frequency.
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Purpose of audit

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  1. 1
    Looking at the overall process - Audit foresees the set of interrelated or interacting activities, which transforms inputs into outputs.
    It gives emphasis to the linkage of the processes and its ability to produce products that conforms customer requirements.
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  2. 2
    Auditing for conformity - Auditing conformity enables the organization to realize parallel improvements.
    The characteristics or activities that produce good results from one process to another process or different line are implemented.
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  3. 3
    Auditing for effectiveness - Audit measures process ability to produce results and corrective/preventive actions that will satisfy customer requirements.
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  4. 4
    Approving Suppliers/ Subcontractors - Auditing will evaluate if a supplier or subcontractor has a process and product that is capable of the requirements and specifications required by the organization.
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  5. 5
    Assessing for Certification - Auditing will evaluate if an organization has a process and product that is capable of the requirements and specifications required by the customer.
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  6. 6
    Investigating problems - Auditing is a tool use to solve problems.
    Through audit, you will be able to identify the possible cause and outflow of the identified problem.
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  7. 7
    Way of improving - Conducting an audit will continually improve the process.
    An audit aims for non-conformance detected to be corrected and be prevented from reoccurring giving an opportunity for the process to improve.
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Key principles of an audit

  1. 1
    Ethical conduct - It is the foundation of professionalism and includes auditor's behavior that reflects trust, integrity, confidentiality and discretion.
    The auditor must review the company's formal codes of ethics, ethics training programs and compliance policies for legal and industry guidelines regarding ethics.
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  2. 2
    Fair presentation - It is the obligation to report truthfully and accurately.
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  3. 3
    Due professional care - Applying diligence and judgment in auditing.
    Auditors must exercise care related to the importance of the task and the confidence placed in them by the auditee. The respect shown an auditee and how an auditor conducts himself during an audit.
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  4. 4
    Independence - Independence forms the basis for impartiality of the audit and objectivity of the audit conclusions.
    Auditors must be independent of the activity being audited. They must be free from bias and conflict of interest and should maintain an objective state of mind throughout the audit process, and also ensure that audit findings and conclusions will be based only on the audit evidence.
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  5. 5
    Evidence-based approach - It is the rational method for reaching reliable and reproducible audit conclusions in a systematic audit process.
    The audit evidence must be verifiable, based on samples of the information available, and ensure proper use of sampling is made.
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Audit Types

  • 1st party - Audit your own organization.
  • 2nd party - Audit by subcontractor or supplier.
  • 3rd party - Audit by a certification body.

Common Internal Audit Failure

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  1. 1
    Perceive audit as waste of time - Cooperation between auditee and auditor must exist.
    A good participation by the auditee will make the audit process fluent.
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  2. 2
    Lackluster auditor selection process - The selection of auditors must ensure the right people are selected to be auditors.
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  3. 3
    Lack of proper system to train auditors - The organization shall establish and maintain documented procedures for the training needs and to achieve competence of the auditors.
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  4. 4
    Inadequate process to evaluate ability to perform audit - The auditors ability to perform audit must be check.
    A training evaluation system shall be established to measure the competence of the auditors.
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  5. 5
    Over-reliance on quality department - An audit is not a responsibility by the quality department alone.
    This requires the cooperation and participation by different departments to make it effective.
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  6. 6
    Poor auditor judgment leads to lack of confidence in internal audit result - Due to inadequate training and evaluation system, auditors are incapable of providing appropriate judgment leading to unreliable internal audit result.
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  7. 7
    See auditor as fault-finder or trouble-maker - The auditee must understand the purpose of audit.
    Auditors gives us the opportunity to measure our process and identify the points that we are good and bad.
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Steps in conducting audit

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The Typical Internal Audit Cycle:

  1. 1
    PLANNING THE AUDIT.
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    1. Appoint audit team - Audit team should be independent of the audit area. Auditors must be trained, have a good sense of judgment, work effectively/efficiently, report findings clearly, be able to communicate at all levels of the organization, and be objective and ethical.
    2. Define audit objective, scope, & criteria - The audit objective of the team must be clear. Common objectives are to investigate quality issues, assess readiness for external audit, identify improvements, and evaluate capability to meet customer requirements. The audit criteria will be base on standard, customer specific requirements, and company's documented quality management system. The audit scope identifies the extent and boundaries of audit. Audit scope includes physical locations, organizational units, activities, and processes.
    3. Contact auditee - The lead auditor then contacts the auditee. The date and time of audit will be confirmed, and the auditee sets up the opening meeting, checks which people will be available on audit, and checks other necessary details or information about the process.
    4. Review document - Manufacturing standard, working standard, and other documented procedures are reviewed. Previous external and internal quality audit nonconformity and OFI's are also checked.
    5. Prepare audit plan - The audit plan should follow the process and the plan must be known to the auditee. The plan must make efficient use of time and should be flexible.
    6. Prepare checklist - The checklist must be concise and should follow the process. This tool verify completeness of audit and not to take over audit.
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  2. 2
    CONDUCTING THE AUDIT.
     
    1. Opening meeting - It starts with a courtesy talk. The auditor can explain the process, set expectations, confirm plan, and answer questions. The opening meeting agenda may contain introduction, purpose and scope, plan for the day, confirm authorized person to acknowledge audit report, reporting method, and questions and answer.
    2. Collecting & verifying audit evidence - The methods in collecting and verifying information may include interviews, observing activities, and reviewing documents.
    3. Evaluate audit evidence against audit criteria - Audit evidence and audit criteria are weighted against to obtain audit findings.
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  3. 3
    REPORTING THE AUDIT.
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    1. Audit review meeting - This happens before final audit conclusion. This is to utilize team experience in evaluating audit findings and to avoid making wrong audit conclusions. The purpose is to review audit findings in a collective manner.
    2. Review audit finding with auditee - If necessary, findings are evaluated with the auditee.
    3. Conclusion & Report Writing - A formal, factual and agreed record of Audit including nonconformity, observations, corrective actions, timescales, conclusions and recommendations. A typical audit report contents are conclusion, non-conformity(NCR), and opportunity for improvement(OFI). An audit report should not contain individual names in nonconformity, confidential information, subjective and emotive statements, and information not raise previously.
    4. Closing meeting - The closing meeting agenda will contain the summary of good points, nonconformity/findings, observations and advice, corrective action, report details, what happens next, and questions & answer.
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  4. 4
    CORRECTIVE ACTION & FOLLOW-UP.
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    1. Circulate audit report - Audit report will be circulated so as to aware and inform concerned parties for the necessary review and actions to provide.
    2. Update audit schedule - Check and update the audit schedule for the progress. Follow up with concerned parties if necessary.
    3. Corrective action (auditee) - Corrective actions on nonconformity discovered shall be provided to eliminate root cause and prevent recurrence.
    4. Verify completed actions - Check and measure if actions taken have eliminated root cause satisfactorily.
    5. Close case - if actions taken have eliminated root cause satisfactorily.
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Tips in auditing

Put people at ease - Putting people at ease will make the audit flow comfortable. This establishes a link between the auditor and the auditee. The auditee will then be able to understand the point the auditor wants to know.

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  • Find best place for interview
  • Reason for interview & note taking should be explained
  • Smile when appropriate
  • Avoid barriers
  • Keep at same physical level as auditee
  • Be assertive
  • Don't infringe personal space
  • Be open in speech and manner
  • Use humor, but only if appropriate
  • Be calm, cool and objective

Interview process - A good interview will include the following:

  • Identify individual to be audited
  • Introduce yourself
  • Explain why you are there and break the ice
  • Ask open questions
  • Ask detailed questions
  • Do show me please
  • Check facts and make notes
  • Thank auditee
  • Identify next auditee on trail drawing

Audit the person responsible for the activity to be audited. This begin by asking the auditee to explain/describe the activity and this should be performed during normal working hours.

Auditors needed to know - Auditors for ISO/TS 16949 are required to demonstrate competence for:

  • ISO/TS 16949 Technical Specification
  • Audit methodology
  • Automotive process approach to audit
  • Core tools (APQP, FMEA, SPC, MSA, PPAP)
  • Customer-specific requirements

Questions Auditors Should Ask - Auditors ask the following questions to foresee the necessary details needed to know during the audit:

  • Who is the owner?
  • What is the purpose of your process?
  • What are the inputs to your process?
  • What are your process outputs?
  • What type of process are you working on?
  • What are the important process parameters?
  • What do you measure about your process?
  • What do you do with these measurements?

Writing the non-conformance statement - A non-conformance statement should contain the following details:

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  • 1. Explain the fact
  • 2. Record the objective evidence(details)
  • 3. Reason why it is NC (ISO/TS16949)

Question and comments

What does the auditor need to look at? - Auditor need to look at the process from different aspects and ask the essential questions:

  • What is the process purpose, the intention of the process?
  • What are the inputs/resources required before the process can begin?
  • What is the objective?
  • What is the end product/service delivered upon completion of the process?
  • How is it monitored and measured?
  • Is it effective? Is it efficient?
  • Do the results meets the objective?
  • Constraints (ex. law, regulation, environment)

How to get the most out of an internal audit? - An internal audit must contain following aspects in order to maximize the benefits of performing Internal Audit:

  • Must be a no blame culture
  • Auditor and auditee should work in partnership
  • Encourage staff to reveal problem areas
  • Both auditor and auditee should look for improvements
  • Audits must be seen as essential part of business
  • Positive terms can be used
  • Findings or nonconformity should be seen as opportunity to improve.
  • Must be adequate time and resources for auditee/auditor to perform audit

How to do a process approach audit?

  • Be calm when editing to avoid stress and hypertension.
  • Gather the documents that needs to be edited.
  • Classify the documents to avoid mixing them up.
  • Audit one at a time. Finish each document started before auditing other documents.
  • Re-audit the outcome of the auditing to check whether the result is reliable.
  • Check the results from the first audit with the second audit.

What are the key focus of ISO/TS 16949 audit?

  • Improvement of products
  • Improvement of processes
  • Reduction of multiple registration of third party
  • Boosting of confidence in global outsourcing
  • Consistency in quality

How to Conduct Internal Audit: The Basics

It is true that the audit for each and every project differs from one another however; the fact prevails that the process for auditing for all projects is the same. Primarily, internal audit entails 4 relevant steps, and these are:

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  1. 1
    Planning and in some cases or organizations, it is being referred to as Preliminary Review or Survey.
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  2. 2
    Fieldwork
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  3. 3
    Audit Report
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  4. 4
    Last but not least, Follow-up Review.
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At every stage in the internal audit process, the involvement of the clients is very critical. In terms of special projects, the end results of the auditing process are in accordance to the amount of time that is being consoled from the typical routine of the department. Among the most important aspects in internal auditing is minimizing the time, as well as prevent the disruption of other ongoing tasks.

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Planning

At this particular point of the internal audit, the auditor or the one who does the process tells the client about the audit. He/she also explains the scope, as well as the examination objectives, specifically during formal meeting with the management. The auditor also amasses details about relevant procedures, observe the present controls, as well as make appropriate planning for the other auditing stages.

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  1. 1
    Announcement Letter.
    Through this letter, the client will be informed about the audit, and this comes from the Internal Audit Director. This letter also tells about the objectives and scope of the auditing process, who are doing it, and the other important details.
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  2. 2
    Initial Meeting.
    During the meeting, the client talks about the system or the unit that is about to be reviewed and other important aspects. The one who will do the internal audit will then meet the Senior Officer who handles the system or unit that is under or will be reviewed.
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  3. 3
    Preliminary Survey.
    This is the point when the internal auditor amasses details about the system or unit, to acquire the general overview of the operations.
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  4. 4
    Audit program.
    Here, the preliminary review stage will have a conclusion. This stage entails the fieldwork required in order to attain the objectives of the audit.
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Fieldwork

This stage is more on the informal communications, as well as transaction testing. During this stage, the internal auditor ascertain if the controls that are determined on the Preliminary Review are being executed appropriately, and if it is done in the way as instructed by the client.

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  1. 1
    Transaction Testing.
    Once finishing the Preliminary Review, the internal auditor executes the processes included in the audit scheme. The processes test the primary internal controls, as well as the propriety and accuracy of the transactions.
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  2. 2
    Informal Communications and Advice.
    This phase allows the client to render the internal auditor insights or advices about ascertaining the most suitable solution for the finding.
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  3. 3
    Working Papers.
    These papers serve as back up for the audit opinion, since they relate the accounting records of the client and the financial based on the opinion of the auditor.
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Audit Report

The final report is considered as the principal product, and through this, internal auditor could express his/her opinions, show the findings of the audit, as well as explain the suggestions for enhancements.

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Follow-up Report

At this stage, the actions done by the client in order to alleviate the initial report findings are being listed. This report will also talk about the unresolved findings, which entails brief description of every finding. Other aspects that are included in the Follow-up Report are original audit suggestion, the response of the client, the present condition, and others.

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  • If you have any concerns with any of these steps please post in the comments section below.

Questions and Answers

How much frequency of product audit for molding (plastic) part?

Frequency of product audit as per TS 16949 & OEM company.

There is not enough information provided to provide an exact answer to your question, as the ISO/TS 16949 standard can vary depending on the parts, numbering system and intent, and of course the requirements of the OEM company.

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The auditor you employ to perform the test process will be able to give you more specific information on the actual number of audits, but there will always be important considerations. For example:

  1. 1
    If there is a product defect, the number of audits may increase to compensate and confirm that any problems have been corrected.
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  2. 2
    If you are using materially different parts, the OEM manufacturer may request a different audit setting.
    For example, car radio knobs will have less stringent criteria than car window handles.
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  3. 3
    International and local regulations the OEM manufacturer is subject to can also modify this number.
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  4. 4
    The speed of your production line will also be a factor.
    A line producing 1,000 pieces an hour will require much less frequent testing than one producing 100,000 pieces an hour.
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With that in mind, your auditor will usually pull a random part or parts at regular intervals, and test them to ensure they meet the required minimum product specifications. In some cases this can be once an hour, but other times an auditor may pull several parts every couple of hours and then test.

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What is the difference betweeen a system and a process audit?

When doing a system audit do you take a procedure or work instruction and audit the system i.e.: non-conforming product. Take procedure and audit it (this is a system audit)

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Hello Sir, about product audit?

Dear Sir, I have to plan a product audit in our company, but Sir here the process of making job & type are equal but sizes varies, So Sir what will be the frequency of audit to One Product?

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Hi, I am looking for a "script" or a dialogue on what to say/how to go about conducting an internal audit as we were tasked to make one. Thanks?

A script or a dialogue in conducting an internal audit, i.e., greetings, introduction, etc.

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Who should be invited to internal audit opening meeting?

Only the auditors or should the auditees be invited also

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Template and referencing to ISO9002:2009?

I did an audit with Quality System as the guide. The deviations are ample, but I think if I can reference back the deviation to the ISO system the definition will assist in guiding the solution.

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How to establish an effective internal audit plan within an TS Certified Organization?

I am currently working on establishing effective internal audits within an organization that currently does not perform audits efficiently in compliance with TS standards, however, I am very new to the company and unsure on where to start with getting everything in place and building my team. Also, there is an unclear understanding within the organization the difference between a process audit and a system audit as well as following the process. Can you help with the best approach to this situation?. I have tried: Currently reviewing all Procedures and documents in QMS system for accuracy.. I think it was caused by: Lack of resources and experience.

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Want to give my organization a seminar on typical internal audit cycle. 30mins maximum. Please advise how can I effectively do this. Thank you?

I conducted an audit year in year out but not professionally, so I have to come up with an audit plan procedures etc. Now I need to let the auditee know so when implemented they will be conversant with the new process.. I have tried: Nothing. It is a new thing I want to introduce.. I think it was caused by: I am not aware of the existence of an audit plan

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How to develop audit program for rubber manufacturing industry?

I want to develop an audit program for purchasing raw material (rubber) from farmers outside the company I work for.

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How to comply with 8.2.2.1? Quality Management System audit (ISO/TS 16949:2009 clause 8.2.2.1) - The organization shall audit its quality management system to verify compliance with this Technical Specification and any additional quality management system requirements?

I don't understand how to comply with Quality Management System audit (ISO/TS 16949:2009 clause 8.2.2.1) - The organization shall audit its quality management system to verify compliance with this Technical Specification and any additional quality management system requirements.. . How do you audit the QMS?

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Can I use recent "real world/work" examples of an issue during an internal ISO audit to follow processes? Is that considered "biased"?

Inventory accuracy affect on-time deliveries. Often, these are provided to me in my role and communication between departments is lacking and adjustments are not made. My Management Rep thinks I am being biased when I point out specific deficiencies that I have encountered in MY purchasing role.

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