Internal Audit Development: Preparing for External Audits

An internal audit is used to assess conformity, effectiveness and identify opportunities for improvement of an organization’s Quality Management System (QMS), Environmental Management System (EMS), IATF Automotive Management System, Aerospace & Defense Management System, Occupational Health & Safety Management System and/or Laboratory Management System.

Internal audits also help organizations prepare for external audits from customers and registrars, reducing the cost and impact of last-minute attempts to fix system breakdowns. All ISO & related standards require internal audits to be performed to determine if the Management System is being maintained, is effective and is continually improving allowing for the organization to maintain its certification.

A common practice is to train 2 to 6 employees of the organization to perform the required internal audits on a regular basis. Getting employees involved in the Management System is usually a good idea as it expands the employee’s knowledge of how the Management System works, how work is performed in other departments and the importance of the system in the life of the organization. So, there are some positives for organizations having internal audits performed by their employees.

However, there are some negatives in having a company’s employees perform the required internal audits, such as:

  • After the training, the employees do not have the time to perform the internal audit
  • With limited time, the employees perform a cursory internal audit
  • Trained employees do so little auditing over time, they lose their auditing skills and the audits are ineffective.

As an alternative, firms can utilize a very effective approach of employing a “2nd Party Auditor”.  This approach has the clear objective of improving the management system through audit, without the risk of Certifying Agency findings or the immediate time requirement from employees.

Illinois BIS offers 2nd party audits through its Internal Audit Development Program.  Under this program, the audit is conducted by a qualified Illinois BIS Consultant/Auditor. The 2nd party audit has clear benefits:

  • The 2nd party auditor is an experienced seasoned auditor and is certified by an accredited body
  • The 2nd party auditor will perform a “process audit” to determine if the processes in the organization are effective and efficient and identify those processes that are not
  • The 2nd party auditor will evaluate, analyze and assess the risks and controls of the organization’s Management System and the organization’s compliance with policies, standards and laws.

During the audit, the Illinois BIS professional will observe, take notes, review documents and interview employees. The Illinois BIS professional will test employees’ knowledge of company objectives, standards and compliance rules. During the interviewing of company personnel, the auditor also may use the interview as a training opportunity by coaching the employee as to the purpose of the audit and how to respond to an outside 3rd party auditor’s questions.

The most significant advantage of using an Illinois BIS professional is identifying opportunities for improvement, without the impact of findings from a Certifying agency.  Over the years of performing this work, Illinois BIS has been able to identify and suggest impactful opportunities for its clients, including:

  • An Illinois BIS auditor reviewed a client’s wastewater discharge permit and noted that the organization was limited to a set number of gallons of wastewater discharge per month. The organization was in the middle of an expansion that would increase the monthly discharge. By seeking approval for a higher limit before the startup, the organization avoided a significant penalty.
  • The auditor attempted to audit a hot forming process but the robot placing the part in the die was shut down for an emergency repair. The hot forming operator told the auditor that the hydraulic hose on the robot broke during the operation. The operator also stated that this hydraulic hose was failing frequently because of location. The auditor suggested that a stainless-steel web reinforcing hose be used to extend the life cycle of the hydraulic hose or the hose moved to a different location.
  • The auditor was observing the loading of small packages onto a pallet. The Packer had to carry the package from a table to the pallet on the floor about 6 feet from the table. The auditor suggested moving the pallet close to the table and provide a scissor jack device to raise the level to the table height. This would improve the efficiency of the process and reduce the employee’s fatigue & stress of bending over to load the pallet on the floor.
  • Rather than depending on the Supervisor to occasionally download the software programs from the CNC machines to a thumb drive, he suggested uploading the machining programs directly to the server to mitigate the risk of losing organizational knowledge.

Businesses that periodically bring in a 2nd party auditors are shown to have better performance of risk management, regulatory compliance, management control and governance processes over time.

Find out how Illinois BIS can help your organization today!

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John Pop
Illinois BIS