Internal Audit- Presatation

7/28/2019 Internal Audit- Presatation

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Internal Quality Auditing

Terminologies


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TERMINOLOGIES

*Fitness for use

Conformance to specification

Delighting the customer

Towards zero defects

Free from defectsDegree of excellence

Right fist time all the time


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Quality Inspection State (QI)

Inspection is:-

Conformity evaluation by observation andjudgment accompanied as appropriate by

measurement, testing or gauging (3..8.2) After-the-event screening process

Application point within the process

Thirty party inspection or operator sell inspection

Decision scrap, rework, medication, concession

No prevention content-does not provide anybasis for process improvement


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Outline

Definition of quality and other related

terms

Historical development of quality

management

Functions affecting quality

Achieving quality assurance


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Historical Development of QM

The development of quality annulment can

be defined in four stages:

1) Quality inspection stage (QI)-1920s

2) Quality control stage (QC) - 1950s;

3) Quality assurance stage (QA) - 1970s;

4) Total quality management (QM) stage


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Quality Assurance Stage (QA)

Quality Assurance is:-

Part of quality management focused on providing confidence thatquality requirements will be fulfilled (3.1.11)

Issues of progression from QC to QA

-Change n emphasis from production to process

Third level of quality development-Represents a shift from detection to prevention

-Planed and systematic actions defined

Existence of motive quality systemISO 9000

Gender use of QM tools SPC, QFD, FMEA

Quality performance and costs Major customer approval


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The ISO 9000 Concept.

Represents an international consensus on goodmanagement practices for a systematic andgeneric application of principles and practicesbased on quality

ISO 9000 is a written standard that defines thesystem that organizations should use to ensurethat their products and / or services meet orexceed customer expectations

A set of standardized requirements for qualitymanagement systems and is applicable to anyorganization regardless of its size or whetherpublic or private sector


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Quality Defined: ISO 9000:2000

Degree to which a set of inherent

characteristic fulfils requirements (3.11)

-Characteristic distinguishing feature, i.e.

physical, sensory, temporal or functional

etc (3,5,1)

-Requirementneed or expectation that is

stated or implied or obligatory, i.e. custom

or common practices for you (3.1.2)


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Total Quality Management Stage

Represents the most advanced stage of quality development today(TQM was first used in 1985 to describe the Japanese style atquality improvement Naval Air Command System UK)

A Management philosophy

Company wide approached centred on application of QM to all

aspects of business-Focused on the requirements of the customer satisfaction

-Participation of all employees

-Recognized the important of suppliers

-Aimed at long term success for

Development of organization culture

Continue improvement Benefit of all employees, stakeholders and society


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The ISO 9000 Concept

ISO 9000 is seen as a vehicle towardsTQM

The principal goal of the ISO 9000

Standards is to demonstrate qualityassurance

Quality culture refers to the degree of

awareness, commitment, collectiveattitude and behaviour of the organizationwith regard to quality


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What is Quality Management?

Quality Management (QM)

Coordinated activities to direct and control an

organization with regard to quality (3,2,8)

Management System (SM)

System to establish policy and objectives and to

achieve those objectives (3,2,2)

Quality Management System (QMS) Management system to direct and control and

organization with regard to quality (3,2,2)


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Quality: Meeting Requirements

Specifications are imprecise means of

conveying subjective aspects i.e.

-Not everything is measurable, e.g. courtesy

or friendliness

Thus, conformance to requirements is not

necessarily all there is to achieving quality


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QUALITY CLASSIFICATION

Product quality may be classified into two

categories;

Quality of design

Quality of conformance


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QULTITY

QUALITY LOOP


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Quality: Customer Satisfaction

Customer Satisfaction or is it meeting

requirements?

Only true measure of acceptable quality ...

-Takes account of both subjective and

objective interpretations of needs and

expectations

-Correct interpretation of needs and

expectation.. Acceptable quality


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TERMINOLOGIES

QUALITY POLICY

Overall intentions and direction of anorganization related to quality as formally

expressed by top management

QUALITY OBJECTIVES

Something sought, or aimed for, related toquality


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ACHIEVING QUALITY

ASSURANCEThe organizations concern is to provide quality

products / services

To succeed the company must offer products thatfulfill the following objectives.

Meet well define need, use or purpose Satisfy customers expectations

Comply with applicable standards andspecifications

Comply with statutory requirements Are made available to competitive prices

Are provided at a cost that will yield profits


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TO MEET THIS OBJECTIVES

The company must organize itself in a waythat:-

The technical )

Administrative ) Control

Human factors )

Hence the need for a quality system


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Internal Quality auditing

to

ISO 19011: 2000


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Definitions (1)

Audit

A systematic and independent examination to

determine whether quality activities andrelated results comply with the planned

arrangements and whether these

arrangements are implemented effectively

and are suitable to achieve the objectives


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Auditing Standard

IS0 19011 : 2002

Guidelines on Quality and / or

Environmental Systems Auditing


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Outline

Definition of a quality audit

Types of audit

Purpose and objectives of internal audits Creating an environment for successful

audits

Benefits of an effective audit process


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Definitions (2)

Quality Audit

Systematic, independent and documentedprocess for obtaining audit evidence and

evaluating it objectively to determine the

extent to which audit criteria are fulfilled.


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Types of audit

3 types

Process audits Product audits

System audits


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Process audits

Evaluation of the content andeffectiveness of specific processes andwork activities

To confirm the process parameters andimprove capability of the process

To ensure the realization of process

quality characteristics To ensure improvement of process control

during service provision


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Product audits

-To identify opportunities for improvement to

establish the quality level of units before

final inspection and testing

-To establish the capability of the inspection

function

-To determine the usefulness of

inspection/tests


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Audits are distinguished by the

party requesting:

1st party audit (internal audits) the auditee

audits its own quality system according to a

quality standard.

2nd part audits (supplier audits) the customeraudits the suppliers quality system

3rd party audits these are external certification

audits by an independent institution in order to

certify the quality system


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Products audits

Investigation of products conformance to

specified characteristics

-To obtain additional neutral assessment of

products level of quality

-To obtain additional assurance that

specified quality requirements are met


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System audits

Evaluation all the elements of the quaity

system in order to:-

Verify usefulness, suitability and

effectiveness

Verify adequate documentation

Verify compliance with requirements

Determine weak points


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Purpose of audits

Registration /

certification audit

Verify that theorganization's QMS

meet the

requirements of ISO

9001 : 2000

Internal audit

Identify opportunities

for improvement

Maintain ISO 9001

certification


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Objectives of the Internal audit

To verify conformance to applicable

standards

To verify conformance to documented

procedures

To verify effectiveness of the processes in

the system

To identify opportunities to improve the

system


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Creating and environment for

successful audits (1)

Gaining management support

-Documenting audit findings in away thatensures management understands the

effect on system-Linking non-conformities to losses

especially in income

-Making clear the consequence of deviatingform system requirements e.g. yquantifying the losses


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Benefits of an effective audit

process

Reduced operating costs through better

efficiency

Improved customer satisfaction

Improved morale

Reduced barriers between departments

Survival through continual improvement


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Creating an environment for

successful audits (2)

Gaining employees support

-Provide basic training so people understand

the purpose of the audit

-Ensuring people understand their roles

-Making clear that the auditees is the

customer of the audit not the victim

-Ensuring that punitive action is not taken

based on audit findings


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Audit Planning and Scheduling


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Audit Planning and Scheduling

The MR plans the audit

The schedule is drawn by the MR well inadvance in consultation with the Management

Review Board

The schedule must be comprehensive to ensurethat each activity is examined at least once in a

year

MR has overall responsibility


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Drawing an Audit Schedule (2)

Frequency of audits is determined by:-

- Status of activity

- Importance of activity

Provide for unscheduled audits

- Due to failures in the system- Due to new features added to the systme


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Outline

Responsibilities for planning and

scheduling

Drawing of a schedule

Selecting auditors

Audit cycle


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Drawing an Audit Schedule (1)

Can be:-

Departmental

Section Project

Corporate

Period covered by schedule usually 12months


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Selecting Auditors

Identify independent auditors

Train them to form a pool of auditors Assign them the audit task

ABC COMPANY LTD


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ABC COMPANY LTD Dsig.Rev.

Date..

INTERNAL QUALITY SCHEME

1Departmental

section

Auditors JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2Personnel

3Engineering

4Modification

5Sales

6

7

8


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The Audit Cycle (2)

Identification of deficiencies or non

conformance

Proposal and agreement on corrective

action

Corrective action taken

Follow up audit to evaluate effectiveness

of corrective action

Report to management


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Agenda for Management Review

Meeting (5,6,2)

Review of audits

Customer feedback

Process performance & product conformity

Status of conformity & preventive action

Follow up action on previous management

reviews

Changes that affect the quality managementsystem and

Recommendations for improvement


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The Audit Cycle (1)

Identification of the need for the audit

(From the management)

Planning and preparation

Internal audits performed as per the

schedule


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Management Review

Management review meeting (at least

annually)

Management issues the internal audit

schedule

After audits Management analyses results

of the audit


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Preparation for an Individual Audit


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2. Establish audit scope

3. Possible ways:

Audit of entire organization at one time

Audit y department, area or product

Audit by process in the quality system


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4. Establish audit basis

Usually a combination of the quality

system standard and the system

documentation (manual, plans,

procedures, work instructions, standardspecification, etc)


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1. Establish audit type and purpose

Especially if the audits are:

Unscheduled

Occasioned by a problem in the system


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3. Establish audit personnel

Usually appointed by MR

Must be independent of area being

audited

Must have sound understanding of area to

be audited

Usually from pool of trained auditors

Team leaders should be identified


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5. Review basis documentation

A good understanding of the basis

documentation very important

For the standard may choose to underline

all sentences with the work shall

For system documentation useful to start

with the manual, followed by procedures,

etc


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6. Prepare process model

Identify inputs and outputs of the process

being audited

Identity desired results of the process


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8. Notify the auditee

Notify auditee in advance of:

Time

Date The scope

The basis

Timetable of the audit issue notification in

writing


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Notification

Timetable allows auditee to:-

Organize who will attend

Make himself available or assign a guide

Organize resources (guide, meeting room

etc)

Timetable should be sent to auditee well inadvance


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7. Review previous audit results

Should be done both for internal and

external audits

Effectiveness of corrective action from

previous audits can be evaluated

Adds value by not focusing on issues that

have been fully resolved

Ensures that unresolved problems are

revisited until resolved.


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Notification


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9. Prepare audit checklist

Acts as a reminder / guide during audits

Be based on audit basis document

- ISO 9001 : 2000

- Manuals

- Procedures

- Work instruction Use key words


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Checklist preparation

Ensure the following comes out

Quality system is understood and

implemented

Procedures are conformed to

Procedures are effective


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Remember

Audit preparation and planning 50%

Carrying out the audit 30%

Reporting audit and follow up 20%


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Checklist preparation

Audit questions

Use open ended questions which preventthe auditee from answering YES or NO

Do not use leading questions Open questions start with How, Who,

When, what, Which, Why

On your checklist indicate against eachquestion the section of the standardmanual or procedure


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Performing the Audit


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Performing the audit

Before start of audit

Auditees management informs personnel

in the involved departments about

expected audit

Lead auditors and rest of the team must

be acceptable to auditee management


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Personal attributes

God outward impression Ethical

Open minded

Alert, observant

Perceptive

Well spoken and reasoning, diplomatic

Emotionally stable

Calm Self confident

Persistent, insistent, through , curious


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Outline

Auditor qualifications

Phases of an audit

The opening meeting

Rules for auditors

Objectives evidence

Ending difficult situations

Raising non-conformities

Closing meetings


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Auditor qualifications

The qualification on an auditor is founded on

a solid

Education

Training

Experience


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Four phases of an Audit

Opening meeting

Executive of audit

Auditors meeting

Closing meeting


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Opening Meeting

Always arrive on time

Keep it brief

Auditee and others to be present

Cover the following

- Introductions

- Confirm purpose

- Confirm Scope and Basic of audit

- Confirm timetable (plan)


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You my need to start with .. Carry out audit as per the plan

He checklist but dont be a salve of it

You may deviate but dont get disorganized

Met areas of audit with the guide Observe operations at work

Interview personnel

Ask open ended questions

Book all notices, walls, work instruction and procedures

Note equipments calibration and maintenance status Dont ask more than one question at time

Don mope listening


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Some rules for auditors

Keep calm and relaxed

Book at the other person eye contact

Keep one question at a time

Let the other person finish talking Keep the right distance from the person

If your question cause uneasiness oruncertainly, formulate differently

Involve all participants Let the right g


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Opening Meeting contd.

Confirm guide and his role Not an arbitrator

May sign for observations

Not to interfere

Confirm resources availability (tools, office) Confidentality if need be

Confirm time of closing

NB: Keep meeting professional

Tem leader chairs the meeting Dont allow auditee to take over the control of the

meeting


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Audit lozenge

Drawing..

Ask one question a time

Wait for answers from the auditee

Book and observe the answer, person


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Basic communication skills

Tone of voice

Facial expressions

Body language, gestures and posture

Listening and not ignoring auditee


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CHECK Compare what you see and hear with what is written in theStandards, Procedures and Manual

SHOW ME Collaborate with evidence e.g.

- Are signatures by authorized

personnel?

- Are documents dated, traceable?

RECORD Objective evidence to confirm that activities

conform ( or not) with requirements of QMS

-Reference numbers of documents-Persons, department and try to answering

- What, Where, When, Who, How etc


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Objective Evidence

Collect all the details

Exact observation

What was seen / heard

Where

When

Who Why / Creteria


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Handling difficult situations

The nervous, anxious auditee- Clarify purpose of audit light conversation ontopic of interest before interview

Angry resentful auditee

-Treat with respect and find out causes Excessively proud auditee

- Admire work, then move quickly to business athand

The easily distracted auditee-Auditee away from source of distraction


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Performing the Audit

OBJECTIVE / EVIDENCE

Data supporting the existence or verify of

something


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Objective Evidence

ESTABLISH the facts

RECORD the evidence

EXTRACT for compliance

CLARIFY for significant


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Auditors Meeting

Compilation of findings / observation

Recording of non conformities

Preparation o summary report

Formulation of opinions to be presented at

Closing meeting

R i i f i i


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Raising non-conformities

Any considered deviation to be discussedwith auditee

Say what clause it is against

Ensure it is understood

Record the objectives evidence

Commit observation to paper

Have the auditee / guide sign for it


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Evaluating Corrective

Action ..insert table

R t N C f it ?


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Response to a Non Conformity?

There are two routes with which the response of anorganization to a non conformity

Route 1:

Correction action to eliminate a detected non-conformity(ISO 9000:2000 cause (3,6,5)

Analysis of cause

Corrective action: action to eliminate the cause of adetected non conformity or other undesirable situation(ISO 9000:2000 cause 3,6,5)

R t N C f it ?


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Response at a Non Conformity?

My 2 different sequences or routes; Depends on the product type or

The situation of the nonconformity; as to which is thecorrect one to be followed

Example:

For software, it is inadvisable to implement a correctionuntil the cause is known

For a hardware, if a low brake paid warning light were toilluminate in a vehicle and you immediately implementedthe correction of replacing the brake pads beforeexamining II the sensor was faulty, you might fall toresolve the problem and would have wasted time andresources.

O tli


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Outline

Response to non conformity

Reviewing responses

Objective of the QMS

Informed judgment

R t N C f it ?


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There are two routes with which the response ofan organization to a non-conformity:

Route 2

. Analysis of cause

. Correction: action to eliminate a detectednonconformity (ISO 9000:2000 cause( 3,6,5)

. Corrective action: action to eliminate the cause ofa detected non conformity or other undesirablesituation (ISO 9000:2000 cause (3,6,5)

R t N C f it ?


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Both Correction and Corrective action should beexpected when there is a deducted nonconformity

Correction for example,

Correction may involve replacing nonconformingproduction or replacing an obsolete procedure with the

current issueCorrection action:

Cannot be taken without list making a determination ofthe cause of nonconformity\

May methods and tools available from simplebrainstorming to more complex, systematic problemssoling techniques (e.g. root cause analysis, fish bonediagrams, five why's etc

R i i !


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Reviewing responses!

Documentation and objective evidence forcorrections causes and corrective action:

Effective corrective action should eliminate the

cause; Corrective action should not be confused with

preventive action

Preventive actionto eliminate the cause of a

potential nonconformity or other undesirablesituation (ISO 9000:2000 cause 3,6,4,)

QMS Obj ti ?


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QMS Objective?

Improvement- Quality improvement (3.2.12)= part of quality management focused on

increasing the equality to (NOTE the requirements can be related toany aspect such as effectiveness)

Continual improvement (3,2,13) = recruiting quality to increase thequality to . Requirements

Improvement

- Further requirements specify the need for continual improvements tothe quality management system not just sporadic qualitycampaigns

- The term continual improvement is stated 10 times in the standard(5,8 important)

- The term improvement is stated 27 times in the standard

I f d J d t


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Informed Judgment

Conclusion drawn (positive and negative) findings Number of major nonconformities raised

Number of nonconformities raised during audit ofdocumentation

Number of nonconformities raised during audit ofimplementation

Number of nonconformities related to the effectivenessof the QMS

Number of non conformities raised against the clause ofthe standard

Number of nonconformist raised to each

Number of nonconformities raised in each department orarea of responsibility

QMS Obj ti ?


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QMS Objectives?

Effectiveness:- Extent to which planned activities are realized and planned results

achieved (ISO 9000:2000 defn)

. Effectiveness

- ISO 9001 specifies requirements for a quality management systemthat can be used for internal application by organization, or forcertification or for contractual purposes.

- It locuses on the effectiveness of the quality management system inmeeting customer requirements

- The term effectiveness of is state 10 times in the standard (5,3important)

- The term effectiveness is stated 16 times in the standard (8,5important

I f d j d t


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Informed judgment

QMS Effectiveness Conclusion drawn (positive and Negative) findings

- Major / minor conformities

- Working to their processes and procedure

- Strength and weakness of sections / department- Strength and weaknesses of the quality system

QMS effectiveness input:

- Any failure, internal and external

- Internal audit results- Trends

- Corrective and preventive actions


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Reporting and Analysis of audits

Reporting of Audits


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Reporting of Audits

Auditors not responsible for carrying outcorrective action but should facilitate

timely action by:-

Issuing audit report immediately (within 24hrs)

Ensuring that CARs are clear with

reference to finding and specific objectiveevidence

Reporting of Audits


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Reporting of Audits

Report should cover the following headings Date of audit

Scope and purpose of audit

Basis of the audit

Audit tem

Findings- Summary of the non conformities

- Observations noted

- Opportunities for improvement

- Examples of outstanding performance / improvement since last audit

Summary

Attachment (including copies of CARs)

The audit report including any nonconformity report/corrective actionnotices are issued to the auditee or MR

Outline


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Outline

Responsibilities for reporting

Format for reports

Analysis of audits

Records and administration follow-up of

audits

Reporting of Audits


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Reporting of Audits

A standard Proforma for the reporting ofaudit is usually used

Ensure that positive as well as negative

findings are summarized

Reporting of Audits


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Reporting of Audits

ISO 19011:2002 includesrecommendations for report content

Analysis of Audits


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Analysis of Audits

MR will analyze audit reports to identifyareas of common deficiency within QMS

This will initiate changes to the audit

schedule

A full analysis of audit reports is presented

to management review meeting

Following up


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Following up

Can be done in two ways

By the auditors at an agreed time

By the MR after collection of all reports

Records and administration of


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audits

The MR should enter the audits in theaudit log

Original checklist, audit reports and related

documents are retained QMSdepartmental files as records

ecor eep ng examp es Corrective action log


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Corrective action log

Car no Date audited Assigned to Stimulated

completion title

Action completion

date

Planned

verification date

Actual verification

date

Documents

Internal Audit- Presatation